Home Purchase of property Renting out Sale of property Our services Links Contact Imprint When owning a property in Germany, real estate tax (Grundsteuer) is due. This can be passed on the the tenant. The real estate tax is a local tax on land. It is assessed and collected by the city your property is located in. Basis for calculation of the real estate tax is the value of the property (Einheitswert) that is assessed by the local tax authority (Finanzamt). This value is multiplied by the local multiplier and gives the real estate tax. As the multiplier is assessed by the local government, it varies depending on the city your property is located in. The real estate tax is normally paid in quarterly instalments. If the property is rented out, the income is subject to German income tax (Einkommensteuer). If a German property is owned by a German non-resident, double tax treaties allocate the right of taxing the rental income and capital gains income to only one country to avoid a double taxation of this income. Most of the double tax treaties (e.g. Art. XII Germany/UK, Art. 6 Germany/USA, Art. 3 Germany/France etc.).  allocate this taxation right to the country where the property is located. As a consequence, for German non-residents that own a rented out property in Germany it is mandatory to file German non-resident tax returns on an annual basis. If a property is jointly owned, one tax return needs to be filed to determine the profit/loss of the property and to allocate it to the owners. Furthermore, each owner needs to prepare a non-resident tax return to declare the allocated income. The German tax year is the calendar year. Rental income and capital gains income is subject to progressive tax rates from 14 % to 42 %. For taxable income above 250,000 €, a tax rate of 45 % applies. Furthermore, solidarity tax of 5.5 % needs to be paid on the income tax. Until the 2008 tax year a minimum income tax of 25 % existed for non-EU-residents. Please feel free to contact us in case of any questions. Renting out a property in Germany