Taxation of German rental income

16 posts in this topic

Hi

If anyone can help me, it would be great. I bought an apartment in Berlin a few years ago. For various reasons (not understanding how short term lettings work, nor how the electricity and water are charged, as well as paying interest) my expenses have exceeded the income. I have returned the rental loss to the Irish tax authorities each year, but now realise that I should have filed a return in Germany also.

I have paid the local tax each quarter.

Now I don't know how to regularise my tax affairs. I saw on-line that a foreigner can earn €6,000 of rental income and not pay tax. Is this true? If yes, that will sort out my problem for most of the time as the rent received was less than €6,000 each year until very recently. Does anyone know of a German tax advisor who speaks English and deals with taxation of rental income in Germany?

Thank you

Mary

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... my expenses have exceeded the income. I have returned the rental loss to the Irish tax authorities each year, but now realise that I should have filed a return in Germany also.

 

If you had a loss, then you will not have to pay any German income tax after you have submitted your tax return.

 

You do however have to submit a tax return each year, for details how to fill in the necessary tax forms please see Rental income calculation.

 

 

I have paid the local tax each quarter.

 

You paid Grundsteuer each year, that was not income tax (= Einkommensteuer).

Your Grundsteuer is deducted as a business expense when you calculate your rental profit/loss.

 

By the way, most german rental contracts ask for the tenant to reimburse you the Grundsteuer, check the contract you have with your tenant.

If it has that standard clause (e.g. "nach Betriebskostenverordnung") then you should have billed him that in the yearly reckoning you send your tenant about the utility bills (= Abrechnung über Betriebskosten).

 

 

Now I don't know how to regularise my tax affairs.

 

Submit a tax return for each calendar year that you had rental income.

 

You will only need 2 tax forms: "Mantelbogen ESt 1C" and "Anlage V"

 

Tax forms:

 



  • for 2012: http://www.finanzamt.bayern.de/informationen/Formulare/Steuererklaerung/Einkommensteuer/2012/
  • for 2011: http://www.finanzamt.bayern.de/informationen/Formulare/Steuererklaerung/Einkommensteuer/2011/
  • for 2010: http://www.finanzamt.bayern.de/informationen/Formulare/Steuererklaerung/Einkommensteuer/2010/
  • for 2009: http://www.finanzamt.bayern.de/informationen/Formulare/Steuererklaerung/Einkommensteuer/2009/

 

 

You send in the filled in and signed tax forms and your proft/loss calculation to the Finanzamt of the city that the flat is located in, in your case it depends on in which area of Berlin the flat is in (e.g. Charlottenburg, or Wedding):

 


  • Finanzamt Berlin
    Charlottenburg
    Bismarckstraße 48
    10627 Berlin

    Finanzamt Berlin
    Friedrichshain-Kreuzberg
    Mehringdamm 22
    10961 Berlin

    Finanzamt Berlin
    Lichtenberg
    Josef-Orlopp-Str. 62
    Haus 1 Aufgang 2
    10365 Berlin

    Finanzamt Berlin
    Marzahn-Hellersdorf
    Allee der Kosmonauten 29
    12681 Berlin

    Finanzamt Berlin
    Mitte/Tiergarten
    Neue Jakobstr. 6-7
    10179 Berlin

    Finanzamt Berlin
    Neukölln
    Thiemannstr. 1
    12059 Berlin

    Finanzamt Berlin
    Pankow/Weißensee
    Storkower Straße 134
    10407 Berlin

    Finanzamt Berlin
    Prenzlauer Berg
    Storkower Straße 134
    10407 Berlin

    Finanzamt Berlin
    Reinickendorf
    Eichborndamm 208
    13403 Berlin

    Finanzamt Berlin
    Schöneberg
    Potsdamer Strasse 140
    10783 Berlin

    Finanzamt Berlin
    Spandau
    Nonnendammallee 21
    13599 Berlin

    Finanzamt Berlin
    Steglitz
    Schloßstr. 58/59
    12165 Berlin

    Finanzamt Berlin
    Tempelhof
    Tempelhofer Damm 234/236
    12099 Berlin

    Finanzamt Berlin
    Treptow-Köpenick
    Seelenbinderstr. 99
    12555 Berlin

    Finanzamt Berlin
    Wedding
    Osloer Straße 37
    13359 Berlin

    Finanzamt Berlin
    Wilmersdorf
    Albrecht-Achilles-Straße 61-64
    10709 Berlin

    Finanzamt Berlin
    Zehlendorf
    Martin-Buber-Str. 20/21
    14163 Berlin

 

 

 

I saw on-line that a foreigner can earn €6,000 of rental income and not pay tax. Is this true? If yes, that will sort out my problem for most of the time as the rent received was less than €6,000 each year until very recently. Does anyone know of a German tax advisor who speaks English and deals with taxation of rental income in Germany?

 

Not true.

Taxation goes by your rental profit, not by how much you took in: if you don't have a profit then you will not end up paying any income tax.

 

If you did have a profit, you will pay income tax from the first € of your profit, since you are not resident in Germany.

 

 

Does anyone know of a German tax advisor who speaks English and deals with taxation of rental income in Germany?

 

You could have a look in the list of tax advisors that advertise here on Toytown (see pinned posts at the top of the Finance forum), but your case isn't really that complicated, you can fill in the tax forms yourself.

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Hi to you all,

 

Just read the above comments and not sure I understand or if applicable to me.

 

I recently left Berlin and will be outside of the EU for while, Saudi Arabia for the first year anyway. I will rent out my place in Berlin.

 

Do I have to pay tax on my rental income in Germany or in Saudi Arabia.

 

I have emailed two "Steuerbeater" and have received two different answers.

 

TIA for your feedback.

BB.

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To Germany, you always have to tax the income from real estate in the state the real estate is located in, that's the Belegenheitsprinzip.

 

There is no general double taxation agreement between Germany and Saudi Arabia, there is only is only one about airlines and airline employees: http://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Saudi_Arabien/saudi_arabien.html

 

Which means that taxation defaults to Germany (if there had been a general double taxation agreement, that would have just said that Germany has the taxation rights on German real estate income, so the end result would have been the same).

 

 

You will have to declare the German rental income every year in a German tax return, the deadline for the 2018 tax return is 31. July 2019 if you do the tax return on your own.

You will then have to pay German income tax from the first € of your profit (since you're no longer resident in Germany, you no longer get the first 9,000€ Grundfreibetrag of your yearly income tax-free).

 

Details in: 

 

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Hello all - (full disclosure - Newbie here!)

 

Quick follow up question on BobbyB request

If I understand well, for a US citizen who repatriated back to the US after a dozen of years living in Germany and who owns own a rental property in Germany, a Deutsche nonresident tax return is still required. Am I correct? I hope I am wrong?

 

He still reports the rental income on his US return but hasn't declared it in Germany since he repatriated in 2017. 

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1 hour ago, Global Xpat said:

If I understand well, for a US citizen who repatriated back to the US after a dozen of years living in Germany and who owns own a rental property in Germany, a Deutsche nonresident tax return is still required. Am I correct?

 

You're correct.

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Hello to everyone,

I also have a question on the taxation of German rental income.

 

I own a flat in Germany that I'm renting out and I live in another EU country, both since 2017. I have filled my 2018 tax declaration stating the income (8370 eur cold rent + 2400 eur for wohngeld + 186 eur of additional income = 10956 eur) and expenses (8040 eur) that I had for the flat, which results into a profit of 2916 eur over the whole year (classified as Einkünfte aus Vermietung und Verpachtung aus bebauten Grundstücken). I had no other income in Germany. I used ElsterFormular to fill the tax declaration and the software estimated that I would not have to pay any tax on this income.

 

Instead, in the tax certificate that I received from the Finanzamnt, I have been charged with an income tax of 493 eur calculated using the basic tarif of 11916 eur (estzusetzende Einkommensteuer zu versteuern nach dem Grundtarif 11.916 eur). I do not understand why I was taxed this amount and why such calculation was done, could someone help me understanding the reason?

 

Thank you very much in advance,
Best regards

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Dear PandaMunich,

thank you very much for your quick reply. I'm aware that I cannot benefit from the tax exemption on the first 9k € of income, but I still do not understand why I was taxed on a Grundtarif of 11916 € instead of 2916 € which were my profit (as stated in your first answer in this thread). Furthermore I do not understand where do these 11916 € come from. Could you please clarify?
Thank you very much

 

P.S. Vlad is a diminutive of Vladislav

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4 minutes ago, vlad26 said:

Furthermore I do not understand where do these 11916 € come from. Could you please clarify?

 

9,000 (the personal allowance that Panda refers to) + 2,916 (your profit) = 11,916

 

As a non-resident, you pay on an income of 2,916 euros the same tax that a resident would pay on 11,916.

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Because the 9000€ tax-free amount is built-in into the Grundtarif, look here for the Grundtarif tax table: https://einkommensteuertabellen.finanz-tools.de/downloads/grundtabelle-2018.pdf

 

The Finanzamt only have this table, which is meant for residents.

So how can they calculate the tax you will owe as a non-resident, if they only have a table for residents?

 

Solution: they simply add: 2916 + 9000 = 11916

and look up the tax due on 11916 in their "normal" above linked Grundtarif table for residents, which then gives them the correct tax for a non-resident's income of 2916€.

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Thank you Smaug and PandaMunich, now I understand how the calculation is done... this is unexpected to me, I thought that the allowance would work the other way round, namely as a deduction from the income you have... so that a resident in Germany would pay on a hypothetical income of 15k a tax only on 15k-9k = 6k euro, while a non-resident would pay a tax on the full 15k. That would have been my common sense logic, but now I see that the Finanzamt has just a table with a precalculated tax rate on fictional numbers and has to use it the way you explained.

 

Last question: according to double taxation treaties, do I have to declare this income also in the country I'm living in (Italy), and, if yes, can I subtract the already paid tax amount?

Thank you very much

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13 minutes ago, vlad26 said:

Last question: according to double taxation treaties, do I have to declare this income also in the country I'm living in (Italy), and, if yes, can I subtract the already paid tax amount?

 

Yes, you have to declare it in your Italian tax return and also tell them how much German tax you paid, and the Italian tax department will then reduce your Italian income tax by the 493€ that you already paid to Germany.

 

That is what is written in article 24 (2) a of the double taxation agreement between Germany and Italy: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Italien/1990-08-18-Italien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

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On 9/25/2019, 6:21:25, Global Xpat said:

Thanks.

 

Now on to the tax treaty to see whether or not there is a relief.

 

The treaty will provide no help with German taxes.

 

It says Germany has the primary right to tax the rental income.  You will be able to claim a credit on your US tax return (Form 1116 - "passive") for German taxes paid on the income from your German rental property that you compute and report on Schedule E of your US return.

 

NB:  Depreciation in the US on property used "predominantly outside the US" must be straight line (40year ADS property).

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