How Does Renting Out a Home Overseas Affect My German Taxes?
For German tax purposes the income from a foreign rental property is calculated according to German tax rules. Under German tax rules you can offset interest payments on a mortgage, a 2% annual depreciation on the purchase price of the building and any other expense in relation to the property against the rent you receive. In many cases this will leave you with a negative figure for German tax purposes.
How Does Selling My Home Overseas Affect Capital Gains?
As long as you sell your house in the same year in which you have stopped using it as your own home (provided it was your own home for the two previous years as well) it will not be relevant for German tax purposes. If you have owned a property for more than 10 years before you sell it, you will also not be taxed on a capital gain in Germany. Typically a capital gain from a property (which does not qualify for the German relieves as described above) is taxed in the country in which the property is located. In most cases Germany will not tax such a capital gain, but take the gain into account to determine your tax rate on your German income (depends on the country where the property is located).
Are There Tax Incentives for Buying A Home Here in Germany?
Unfortunately there are no tax incentives currently provided under German law for owning your own home.
How Does Buying a House in Germany to Rent Out Affect Me as an Expat?
You can offset against your rental income:
- Interest payments on your mortgage
- 2% annual depreciation (on the purchase price of the building)
In most cases this will result in negative rental income for tax purposes.
If you are tax resident in Germany and have other sources of income in Germany (i.e. salary) you can offset your negative rental income against your salary.