Living abroad, letting in Germany: who handles the tax return and the tenant?
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Two jobs keep coming back every year: the German tax return and the management of the tenancy. Both can be handled from abroad, and both are easier when they are set up at the purchase. LDP Group, a Munich-based firm that helps expats and EU residents buy and manage rental property in Germany, sets up the rental management before the keys are handed over; the annual German return for LDP Group clients comes from the partner tax firm Helm & Partner where the client engages it.
The tax return
Rent from a German flat is German income whatever your residence (§ 49 Abs. 1 Nr. 6 EStG). It is declared once a year on Anlage V, as part of the income tax return for limited taxpayers, with the tax office of the district where the flat stands. The deadline is 31 July of the following year, or the end of February of the year after when a tax adviser files. The basic tax-free allowance does not apply to a non-resident, so the surplus is taxed from the first euro, but the deductions are the same as for a resident: depreciation, interest, management and adviser fees.
File in the loss years too. In the first years of a financed purchase the result is usually a loss. It is not paid out, it is assessed and carried forward, and only a declared loss is assessed.
Your home country decides, under its treaty with Germany, whether it exempts the German rent or credits the German tax. Give your adviser at home the German assessment every year.
The yearly cycle for a landlord who lives abroad: rent and tenant every month, the operating cost statement within twelve months, the German tax return by 31 July of the following year, then the assessment for the adviser at home. Graphic: LDP Group
The tenant
Tenant search and screening, the deposit account, rent collection, repairs, the operating cost statement within twelve months and the arrears process need someone in Germany.
LDP Group's rental management runs through its own company FairMieten in Berlin and Bremen and through vetted partners in its other cities, at a flat monthly fee per tenant for flats bought through LDP Group. For a flat bought elsewhere in one of its cities, LDP Group decides case by case whether it can take on the management and at what fee.
LDP Group itself gives no tax advice. More on the tax side for owners abroad, and on rental management, at ldp.group.