Is a flat to let worth it for you?

1. Count the costs on top of the price

   Purchase costs come on top of the price: together about 5.5 to 12 % of it. Lenders usually want them paid from your own funds.

   Property price
   Transfer tax (Grunderwerbsteuer). 3.5 to 6.5 % of the price, set by each state.

   The rate of the state the flat is in applies, on the day you sign. The calculator above uses it.

   Notary and land registry. Up to about 2 %, the same at every notary.

   The law fixes these fees. They include registering your lender's land charge (Grundschuld).

   An estate agent (Makler), if there is one. Up to about 3.57 % for the buyer.

   For a flat or a single-family house, the buyer pays at most half of the agent's total commission (§§ 656c, 656d BGB).

2. Know what the rent has to cover

   The rent isn't all yours: some costs stay with you whoever lives there.

   Hausgeld you can't pass on. The administrator's fee and the reserve stay with you.

   Water, heating, cleaning and the building's insurance can go on the tenant's service charges if the lease says so. Management and repairs can't (§ 1 BetrKV). The owners' Hausgeld statement usually splits the Hausgeld between the two.

   Empty months and repairs. Weeks between tenants, and the kitchen and bathroom.

   The calculator allows 2 % of the rent for empty months and unpaid rent, the allowance valuers use (ImmoWertV). Repairs inside the flat are yours on top of the building's reserve. Change both to your own.

3. Know the yields

   Gross yield is a year's cold rent on the price, the figure listings quote. Net yield is what's left after the costs, on the price with the purchase costs.

   The rent multiple (Kaufpreisfaktor). 25 times a year's rent is a 4 % gross yield.

   The price divided by a year's cold rent: the higher the multiple, the lower the yield.

   Cash flow. What's left each month after the loan payment, before tax.

   Below zero, you add the difference each month. Part of the payment repays the loan, and that part stays yours.

4. See what tax does to it

   Rent is taxed at your personal rate, on what's left after the interest, the costs you can't pass on and depreciation. A loss generally counts against your other income, such as your salary.

   Depreciation (AfA). 2 % a year for most buildings, 3 % from 2023, 2.5 % before 1925.

   Of the building's share of the price and purchase costs: land isn't depreciated (§ 7 Abs. 4 EStG). In the year you buy, it counts from the month of purchase.

   New builds: 5 % of what's left instead. Declining balance (§ 7 Abs. 5a EStG).

   For a new build bought by the end of the year it's finished, whose construction began, or whose purchase contract was signed, between 1 October 2023 and 30 September 2029.

   The special allowance. Up to 5 % more a year for four years (§ 7b EStG).

   For a new rental flat built on a building application from January 2023 to September 2029, in a building to Effizienzhaus 40 with the QNG seal, costing at most €5,200 per m² without the land, and let as a home for ten years, or it's taken back. With the 5 % above, depreciation comes early: it doesn't add to the total, it brings it forward.

   Interest counts; repayments don't. Interest on the loan for the flat is a cost against the rent.

   What counts is what the loan paid for: the flat you let, not the home you live in (§ 9 EStG).

5. Know what changes in the loan

   A flat to let is a different loan from a home. Each lender sets its own rules: what follows is their practice, not law.

   Own funds. Often more than for a home, and at least the purchase costs.

   Lenders tend to be stricter with a flat to let. They usually want the transfer tax, the notary and any agent paid from your own money, and look at how much of the price you borrow.

   The rent as income. Lenders count only part of it.

   Each lender sets its own share, to allow for empty months and costs, so your other income has to carry the rest. A financing expert knows which lenders count how much.

   A low repayment. Landlords often repay 1 % a year.

   About the lowest a lender allows, against nearly 2 % across all home loans. The interest counts for tax and the repayment doesn't, so more of your money stays free, and some plan to sell after ten years. The other side: more is still owed when the fixed rate ends, to refinance at the rates of the day, or to clear from the sale.

   The terms of an offer, and up to three compared side by side: comparing mortgage offers.

6. Look ten years on

   Sell within 10 years of buying and the gain is taxed at your personal rate, made larger by the depreciation you've claimed. After them, a private sale's gain is generally tax-free (§ 23 EStG). So the calculator looks ten years on: what you'd have put in, and what a sale would leave.

   Against keeping the money. At a rate you choose.

   The same money, your own funds and each year's top-up, kept elsewhere at a rate you set, with the gain taxed at 25 %. We don't suggest a rate: it's a comparison on your assumption, not a recommendation.

   Work out your numbers ↑

Yield and tax in depth: our guide to buying to let. Old or new, and the rent you can charge: old or new. A flat with a tenant in it: buying a flat that's already let.