Schuldzinsen
Mortgage interest — deductible; principal repayment is not.
Schuldzinsen are the interest payments on a loan used to buy, build or repair the rental property. They are Werbungskosten under §9 Abs. 1 Nr. 1 EStG and usually the largest deduction after AfA. Only the interest share counts: the principal (Tilgung) repays your own debt and is never deductible, even though both leave your account in the same monthly instalment. Loan fees, a market-standard Disagio and the costs of registering a land charge are deductible too. If part of the loan financed something else, only the share attributable to the property qualifies. The bank's annual interest statement (Zinsbescheinigung or Jahreskontoauszug) is the document to use; a foreign-currency or non-German loan works the same way if it financed the German property.
Last reviewed: by Yann Lephay.