GATE Berlin

Taxes Derate Perceived Incomes from Property Rentals: Get Berlin Realtor to Advise and Know Exact Returns

13 May 14 - 20:46

Berlin is the hottest destination for investors not because it is the capital of Germany but because of the property boom and relatively attractive prices, making investment in property a sound tactic. It is possible, given that property prices appreciate by 45% a year and rentals by 30% that you buy a reasonable piece of property and get the hoped for capital returns. However, from another perspective, you could be between the devil and the deep blue Spree.  Consider:
If you buy property as an investor and if you sell it off without occupying it, within a period of 10 years, you pay capital gains tax at the standard income tax rate in addition to solidarity surcharge.

If you rent out property, you are liable to pay income tax on rentals. As a foreigner, you only pay income tax on rentals accrued in Germany. For private property income between Euro 8000 to 50.000 the tax rate is 1 to 26%; for amounts between 50.000 to 250731 it is 26% to 42% and for rentals over Euro 250.731 you pay tax at 45% in addition to solidarity surcharge of 5% on the applicable tax rate. If you would found a GmbH company for the purpose of buying the property like an entire apartment block, tax rate for rental income in a specific property GmbH are reduced to 16% flat rate, because you would save the local trade income tax.

Smart investors rely on investment strategy “Buy Property Berlin by Gate Berlin” to find the best solution where they retain maximum earnings or profits. You could, for example, invest only 40% and get external funding for the property; rent it out and pay tax and still come out ahead. This is one of the different investment strategies Gate Berlin experts will devise. It is worth giving them a try.

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