Werbungskosten for German rental property — the complete list

1. The core principle of Werbungskosten

Werbungskosten (deductible expenses) reduce your taxable German rental income euro for euro. Under §9 EStG, any expense incurred to generate, secure, or maintain rental income qualifies as a deduction. You subtract these costs from your Mieteinnahmen (rental income) to find your taxable profit. Non-residents face restricted tax liability (beschränkte Steuerpflicht) under §49 Abs. 1 Nr. 6 EStG. You pay tax from the very first euro of profit. The standard tax-free allowance (Grundfreibetrag), which is 11 784 € in 2025, does not apply to you. Germany applies progressive tax rates ranging from 14 % to 45 %, plus a 5.5 % Solidaritätszuschlag (solidarity surcharge). Missing a 1 000 € deduction costs you between 140 € and 450 € in hard cash. Germany taxes rental income on a strict cash basis. The Zufluss-Abfluss-Prinzip (cash-flow principle) defined in §11 EStG dictates the timing of your deductions. You deduct an expense in the calendar year the money leaves your bank account. You declare rental income in the year you receive it. An invoice dated 28 December 2024 but paid on 3 January 2025 belongs exclusively on your 2025 tax return.

2. AfA depreciation on the building

AfA (Absetzung für Abnutzung) represents the legal depreciation of your building. It is typically your largest non-cash deduction. Under §7 Abs. 4 EStG, the Finanzamt (tax office) dictates fixed depreciation rates based on the year of construction. Properties built after 1925 depreciate at 2.0 % per year over 50 years. Properties built before 1925 depreciate at 2.5 % over 40 years. Residential new-builds completed from 2023 onward depreciate at 3.0 % over 33 years. You apply this rate only to the Gebäudeanteil (building share). Grund-und-Boden (land value) does not wear out and never depreciates. You must split your total purchase price into land and building values. You determine the land value using the Bodenrichtwert (standard land value) published in the local BORIS-D database. Your depreciable basis includes the purchase price plus acquisition costs like the notary fee, real estate agent commission, and property transfer tax. Suppose you buy an apartment for 400 000 €. Closing costs add 40 000 €. Your total acquisition cost is 440 000 €. You determine the land share is 30 %. Your depreciable building basis is 308 000 €. At a 2.0 % AfA rate, you deduct 6 160 € every full year. If you take ownership on 1 October, you claim three months of AfA for that first year. You deduct 1 540 €. Investors buying highly energy-efficient new builds might also qualify for Sonder-AfA under §7b EStG, adding a 5.0 % bonus depreciation for the first four years.

3. Mortgage interest and financing costs

You deduct the cost of financing your rental property. Mortgage interest (Schuldzinsen) is fully deductible under §9 Abs. 1 Nr. 1 EStG. Principal repayment (Tilgung) is never deductible. The principal payment simply moves your wealth from cash into property equity. It does not reduce your net worth, so the Finanzamt does not subsidize it. You also deduct bank setup fees, loan appraisal costs, and the notary fee for registering the land charge (Grundschuldbestellung). If you pay a Disagio (loan discount fee) upfront to secure a lower interest rate, you deduct it immediately in the year of payment. Suppose your bank debits 1 500 € from your account every month. The annual statement shows 1 100 € goes to interest and 400 € goes to principal. You deduct 13 200 € for the year (12 months × 1 100 €). You ignore the 4 800 € paid toward the principal. At a 35 % tax bracket, deducting that 13 200 € reduces your actual income tax liability by 4 620 €. Always download the annual interest certificate (Jahreszinsbescheinigung) from your German bank. This document proves the exact split between interest and principal to the Finanzamt.

4. Hausgeld and running costs

If you own an apartment, you pay monthly Hausgeld (HOA fees) to the WEG (Wohnungseigentümergemeinschaft). You cannot simply deduct the flat monthly Hausgeld payment. The Hausgeld covers both deductible running costs and non-deductible contributions to the Erhaltungsrücklage (maintenance reserve). You deduct the reserve contribution only when the WEG actually spends the money on building repairs. The WEG property manager provides an annual Hausgeldabrechnung (settlement statement) detailing the exact deductible amounts. You deduct advance payments in the year you make them, and adjust for any refund or additional payment in the following year's tax return. You deduct Grundsteuer (property tax), building insurance, and municipal fees like street cleaning and garbage collection. You declare the Warmmiete (gross rent including utilities) as income. You then deduct the utility costs you pass on to the tenant, such as heating and water, as Werbungskosten. You also deduct recurring maintenance contracts, such as the Schornsteinfeger (chimney sweep) or mandatory smoke detector inspections.

5. Repairs, maintenance, and the 15 percent rule

Routine repairs and maintenance are immediately deductible as Erhaltungsaufwand. Replacing a broken window, painting walls, or fixing a boiler reduces your tax base in the year you pay the invoice. However, you face a strict limit during your first three years of ownership. §6 Abs. 1 Nr. 1a EStG defines the 15 % rule for Anschaffungsnaher Herstellungsaufwand (acquisition-related manufacturing costs). If your repair costs in the first three years exceed 15 % of the building's purchase price excluding VAT, the Finanzamt denies the immediate deduction. They reclassify the repairs as part of the building acquisition cost. Suppose your building basis is 200 000 €. Your 15 % limit is 30 000 €. In year two, you renovate the bathroom for 25 000 €. In year three, you replace the floors for 10 000 €. Your total is 35 000 €. You breach the limit. The Finanzamt cancels your previous deductions and forces you to depreciate the entire 35 000 € at 2.0 % over 50 years. Cosmetic upgrades and standard repairs count toward this 15 % limit. Annual maintenance contracts do not. Expansions, such as adding a new balcony or extending the living space, never qualify for immediate deduction. You always capitalize and depreciate expansions.

6. Travel expenses to your German property

You deduct travel costs when you visit Germany to manage your property. Acceptable reasons include inspecting the apartment between tenants, attending the annual WEG meeting, or meeting contractors. You deduct flights, train tickets, and rental cars at actual cost. If you drive a personal vehicle, you claim the Entfernungspauschale (standard mileage rate) of 0.30 € per kilometer traveled. You deduct hotel stays directly related to the property visit. You also claim a Verpflegungsmehraufwand (meal allowance) for days spent away from home. The 2024 rate is 28 € for a full 24-hour day in Germany, and 14 € for the days of arrival and departure. Keep a strict itinerary. The Finanzamt frequently scrutinizes travel expenses from non-residents. They require a Fahrtenbuch (logbook) or precise documentation of your meetings. If you combine property management with visiting family or taking a holiday, you must split the travel costs proportionally based on the time spent. The Finanzamt rejects the entire deduction if the primary purpose of the trip appears private.

7. Professional services and tax preparation

Administrative and professional fees tied to your rental property reduce your tax liability. You deduct monthly fees paid to a Hausverwaltung (property management company) or a Sondereigentumsverwaltung (manager for your specific unit). You deduct legal fees for drafting a lease agreement or pursuing a non-paying tenant. You deduct the cost of tax preparation specifically related to your German rental income. This includes invoices from a Steuerberater (tax advisor) for preparing your Anlage V. You can prepare your German rental tax report from abroad in 10 minutes for 79 € with Anlage V Easy, and you deduct that exact fee on your next return. You cannot deduct costs for preparing your personal tax return in your home country. You deduct bank account fees for a dedicated rental account (Kontoführungsgebühren). The Finanzamt accepts a flat rate of 16 € per year without requiring receipts. If your actual bank fees are higher, you deduct the exact amount using your bank statements as proof.

8. Furniture, kitchens, and equipment

Furnishing an apartment allows you to deduct the cost of the movable assets. The deduction method depends on the item's price. Items costing up to 800 € net (952 € including 19 % VAT) qualify as Geringwertige Wirtschaftsgüter (GWG). You deduct GWG items fully in the year you buy them. A 400 € washing machine is a GWG. A 900 € refrigerator is a GWG. Items exceeding 952 € require straight-line depreciation (lineare AfA) over their official useful life. A fitted kitchen (Einbauküche) depreciates over 10 years. A 2 000 € kitchen yields a 200 € deduction per year. If you buy the kitchen in July, you deduct 100 € in the first year. A bed depreciates over 10 years. High-quality living room furniture depreciates over 13 years. You track these multi-year deductions in an Anlagenverzeichnis (asset register) attached to your tax return. When a tenant moves out and ruins a depreciating asset early, you write off the remaining book value immediately as an extraordinary deduction.

9. Empty periods and uncollected rent

A vacant property still incurs costs. You pay Hausgeld, property tax, and mortgage interest while searching for a tenant. You deduct these empty-period costs fully. You must prove your Vermietungsabsicht (intention to rent) to the Finanzamt. Keep copies of online property listings, newspaper ads, and emails with real estate agents. If you use the apartment for personal holidays, the Finanzamt classifies it as Liebhaberei (a hobby). They deny all deductions for the empty periods. If you rent the apartment to a relative, you must charge at least 66 % of the local market rent (ortsmögliche Miete) to deduct 100 % of your Werbungskosten. If you charge 50 %, you only deduct 50 % of your expenses. If a tenant defaults on rent, you do not declare the missing rent as income. The cash-flow principle dictates that you only pay tax on money that hits your account. You deduct the legal fees and court costs spent trying to recover the debt from the defaulting tenant.

10. Mapping expenses to the 2025 Anlage V

You submit your Einkommensteuererklärung (income tax return) online using an ELSTER-Zertifikat. The Anlage V form groups your Werbungskosten into specific Zeilen (lines). Placing expenses in the wrong line triggers manual reviews and delays your final tax assessment. The mapping below reflects the official 2025 Anlage V form. Line numbers change year to year — verify against your current year's form before submission.

• Zeilen 33–35 | AfA (linear/degressive) | Building depreciation on the Gebäudeanteil
• Zeilen 36–38 | Sonder-AfA § 7b | New-build energy-efficient bonus (+5 % for 4 years)
• Zeilen 39–41 | §§ 7h / 7i | Heritage and listed-building higher depreciation
• Zeilen 42–45 | AfA on movable assets | Furniture, kitchens, GWG (≤ 952 € gross), appliances
• Zeilen 46–48 | Schuldzinsen | Mortgage interest from the bank's Zinsbescheinigung (no Tilgung)
• Zeilen 49–51 | Geldbeschaffungskosten | Notary Grundschuld, appraisal, bank setup fees
• Zeilen 55–56 | Erhaltungsaufwand (full) | Routine repairs deducted entirely in 2025
• Zeilen 57–60 | Erhaltungsaufwand (spread) | Large repairs distributed over 2–5 years (§§ 11a, 11b EStG)
• Zeilen 61–72 | Erhaltungsaufwand (carry-over) | Remaining fractions from 2021–2024
• Zeilen 73–75 | Umgelegte Kosten | Grundsteuer, water, heating, insurance, Hauswart, garbage
• Zeilen 76–78 | Nicht umgelegte Kosten | Hausverwaltung, bank fees (Erhaltungsrücklage excluded)
• Zeilen 80–82 | Sonstige Kosten | Travel to the property, tax-preparation fees, per diems