Buy an apartment on credit and rent it out

thank you very much for your detailed answer! Separating taxes and liquidity makes sense, I will do it that way from now on.

The nearly 40% tax rate is correct, if I’m not mistaken. I simply entered the data for the hypothetical apartment in my 2015 tax return, which I have already completed, as if I already owned it. Then there were always just under 40% deductions, but also refunds on, for example, interest.

I deliberately left out the depreciation because it apparently only applies to buildings up to 50 years old, as I have read.

What I can’t understand is the following:

if you consider the gross rent when calculating income, then you must also consider the entire ancillary costs as expenses
...
Gross rent = 12 x 400€
- Ancillary costs in full = 12 x 150€

First of all, I did not start from the gross rent, but from the net rent. And secondly, in my view it does not make sense to deduct the transferable ancillary costs from my rental income on the income side, because those are borne 100% by the tenant. Or am I seeing this wrong?

I was on vacation, so my reply is a bit delayed.

The nearly 40% tax rate is correct, if I’m not mistaken. I simply entered the data for the hypothetical apartment in my 2015 tax return, which I have already done, as if I already had it. Then nearly 40% deductions always appeared, but also refunds on e.g. interest.

The marginal tax rate of 40% is at about 90-100K€ taxable income under the splitting tariff.

I deliberately left out depreciation because, as I read, it only applies to buildings up to 50 years old.

Depreciation is always calculated from the date of purchase. So you have 50 years to depreciate your house at 2%, regardless of when it was built. For a construction year before 1925, the useful life is 40 years, so a depreciation rate of 2.5%. Ignoring this would lead to an incorrect result. However, depreciation only applies to the house and not to the share of the land.

First of all, I did not start from the gross rent, but from the net rent. And secondly, in my opinion, it makes no sense to deduct the allocable ancillary costs from my rental income on the income side, because these are borne 100% by the tenant. Or am I missing something?

From an income tax perspective, the gross rent (warm rent) must always be considered along with all expenses. If the tenant always pays, you will probably arrive at the same result as if you considered cold rent and only the non-allocable costs, but if you have rent defaults, you may end up with an incorrect (too high) calculation of income tax. Furthermore, the payment timing is important. In case of back payments or refunds to the utility providers or from the tenant, there could otherwise be shifts between years. Since you have to calculate like this for the income tax return, you should also do it this way here.

You should go through everything again with your numbers. I haven’t quite followed some of your figures.

My goodness, the thread is already over 2 years old. Last year, I actually took the step and bought 6 condominiums. All small apartments in the Dortmund area with purchase prices between €23,000 and €40,000. All financed between 80% and 100% with a 20-year full amortization loan. Because the return is okay, the installment matches the taxed rental income, and I (theoretically) don’t need to add money.

In fact, it is a considerable financial risk, especially since I am more of an average earner. However, the risk decreases over the years and I tell myself that once you’ve “survived” 8 - 10 years and the houses are half paid off, you’re basically “over the hill.” I have owned the properties for 1 to 1.5 years now and have mostly had good experiences. Twice I had to spend money on regular maintenance. One apartment (the only one that is also located in a relatively bad neighborhood) seems to attract bad luck. Within a few months, I had two non-paying tenants, whom I was able to get out relatively quickly and without damage to the apartment. In this very apartment, something regularly breaks (fridge, shutter strap torn, shower leaking, etc.).

But overall, I can say that everything is running as I imagined, even though the magnitude of my property purchases only became fully clear to me afterwards. Now I hope and am working to keep it going this way, because I realize it can also go quite differently. If you plan something similar, or even just like this, feel free to ask me anything.

I have a question: how should I imagine an apartment that currently (on average) costs €35,000? For that money, you can't even get a caravan in a flood area...

I have a question: how should I imagine an apartment that currently costs (on average) €35,000? For that money, you can't even get a caravan in a flood area...

It's not a problem at all in the Ruhr area. These are average apartments in simple locations. I just bought an apartment for €22,000 (3.5 rooms, 60 sqm, €5/sqm rent, tenant has been in the apartment for almost 10 years). Paid off through the rent after 10 years.

Crazy. This costs five times as much here. And NOT even near a big city...