# Investing in German property



## MovingOUTofFrance

I am interested in buying a few properties in Germany mainly with the aim of rental income and capital growth over the long term. I need to find out more about risks of property investment in Germany as follows -

1. Firstly is it completely safe for a non Eu citizen to invest in german property? Should I form a company and do it or just buy individually under my personal name?

2. Are rental laws really too bad in germany? What if i get a bad tenant - is it easy to evict them if they dont pay the rent? Does this usually happen in germany?

3. Where is it safer / better to invest - frankfurt or berlin?

4. Typical costs on top of the purchase price ?

5. Lastly taxes on rental income are they very high in germany?

Im wondering also why german property is so cheap - but is it a good way to live off the rental income if i buy 2-3 properties or is it too risky because rental laws are not much in favour of landlords. 

Please note this is not related to any visa issues - i need to invest for the sake of investing not to get a visa...and ive heard many non eu citizens buy property in Germany. 

Thanks a lot.


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## James3214

Didn't you ask the same question a year ago?
http://www.expatforum.com/expats/ge...germany/132345-investing-berlin-property.html

My advice is don't do it. That's why property prices are lower and if you did do it, the only place I would consider would be Berlin.


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## MovingOUTofFrance

James3214 said:


> Didn't you ask the same question a year ago?
> http://www.expatforum.com/expats/ge...germany/132345-investing-berlin-property.html
> 
> My advice is don't do it. That's why property prices are lower and if you did do it, the only place I would consider would be Berlin.


Well i didnt get any proper responses on my last post either. As i said right now I dont care if the market goes up or down, all I need is a consistent safe rental income and i have cash to invest which I need to allocate somewhere. In france the rental laws are horrible, and not much return anymore. Berlin is still cheap compared to many places...in fact property in germany is wayyyy cheaper than property even in India. If it gives me even 5 %. Safe return then I would go ahead with it now.


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## James3214

Here are some quick answers. I am sure a few others can add to them:

1. Firstly is it completely safe for a non Eu citizen to invest in german property? Should I form a company and do it or just buy individually under my personal name?
*I would do individually as I am sure the bureaucracy of forming a company is a lot worse!*
2. Are rental laws really too bad in germany? What if i get a bad tenant - is it easy to evict them if they dont pay the rent? Does this usually happen in germany?
*Not easy to evict a bad tenant, bureaucracy again! Yes, tenants have lots of rights in Germany.*
3. Where is it safer / better to invest - frankfurt or berlin? *Berlin.  Frankfurt is overpriced*.
4. Typical costs on top of the purchase price ? *Add 20% and expect to pay an awful lot of tax on any profits you make (I think you even might have to keep it for 10 years to avoid some taxes)*5.
Lastly taxes on rental income are they very high in germany?
*Also, if you don't speak/understand German, you could leave yourself open to problems.*
*Just my thoughts! but don't do it..I have been here a long while and have no intention of buying property here and will continue to rent.*


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## visanj

MovingOUTofFrance said:


> Well i didnt get any proper responses on my last post either. As i said right now I dont care if the market goes up or down, all I need is a consistent safe rental income and i have cash to invest which I need to allocate somewhere. In france the rental laws are horrible, and not much return anymore. Berlin is still cheap compared to many places...in fact property in germany is wayyyy cheaper than property even in India. If it gives me even 5 %. Safe return then I would go ahead with it now.


If you have cash, better place to invest is in India only. (Bang or Mumbai or Chennai) You will get good rental incomes and also appreciation will be better than EU countries

If I were in your position, I will buy 1 or 2 good apartment in posh area and then let it out for rent for reasonable income


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## MovingOUTofFrance

Income Tax on Rental Income in germany | German Rental Income Tax

According to that the tax on rental income in germany is only 15% for foreign investors. Apparently UK has 0% tax on rental income...that explains why foreigners are flocking to invest in london property.


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## MovingOUTofFrance

visanj said:


> If you have cash, better place to invest is in India only. (Bang or Mumbai or Chennai) You will get good rental incomes and also appreciation will be better than EU countries
> 
> If I were in your position, I will buy 1 or 2 good apartment in posh area and then let it out for rent for reasonable income


India is not a stable country at all, and property market is hugely over inflated in India moreover the headaches are ten times worse than europe. Worst of all indian currency risk is very high, whats the point of high returns on indian property when firstly u cant even get that money out of India and on top of that currency keeps crashing by 20% each year....just 4 years ago 1 euro was equal to 50 indian rupees...and now 1 euro is 86 induan rupees....and I already have enough investments in India...i need to diversify and invest elsewhere....thanks.


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## James3214

MovingOUTofFrance said:


> Income Tax on Rental Income in germany | German Rental Income Tax
> 
> According to that the tax on rental income in germany is only 15% for foreign investors. Apparently UK has 0% tax on rental income...that explains why foreigners are flocking to invest in london property.


Not sure if that 15% or the fact the UK has 0% tax on rental income. It depends on where you are domiciled for tax purposes and I assume that means worldwide income. It maybe the reason why foreigners are flocking to invest in London but I understood it was partly due to most investors prefering a safe place for sterling to hedge against the UK exiting Europe. Also the UK Govt. recently announced it will be introducing capital gains tax on overseas property investors from 2015. Doubt it will have much affect on prices though. UK is still a good bet I believe.


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## MovingOUTofFrance

James3214 said:


> Not sure if that 15% or the fact the UK has 0% tax on rental income. It depends on where you are domiciled for tax purposes and I assume that means worldwide income. It maybe the reason why foreigners are flocking to invest in London but I understood it was partly due to most investors prefering a safe place for sterling to hedge against the UK exiting Europe. Also the UK Govt. recently announced it will be introducing capital gains tax on overseas property investors from 2015. Doubt it will have much affect on prices though. UK is still a good bet I believe.


I think this was for corporate taxes - i did some more research and if u incorporate and buy properties under a company then in germany including social charges ur tax on rental income is appx. 15.8% and in uk there are legal ways to pay zero tax on such income...as for UK exiting the Eu...dont think its possible they cant survive on their own anymore.


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## beppi

1. Firstly is it completely safe for a non Eu citizen to invest in german property? Should I form a company and do it or just buy individually under my personal name?
_Everybody (incl. foreigners) can buy and own property in Germany without any restrictions. Property rights are well enforced, so there is no legal risk. There is no need to go through the buerocratic hazzle of registering a company._

2. Are rental laws really too bad in germany? What if i get a bad tenant - is it easy to evict them if they dont pay the rent? Does this usually happen in germany?
_It is VERY difficult, costly and time-consuming to evict a bad tenant. In many cases, landlords pay tenants to move out.
You'll need a good property manager and a lawyer to manage all this, especially if you're abroad._

3. Where is it safer / better to invest - frankfurt or berlin?
_Generally, rental returns are bigger in cities with high employment and net population increase. Those are mostly in Southern Germany.
If property is cheap, there usually is a reason to it!_

4. Typical costs on top of the purchase price ?
_Transaction tax (Grunderwerbssteuer) is between 4.5 and 6.5% (depending on the location), registration fees (Notargebuehren) approx. 2% and, if involved, a property agent charges another 3 - 5%._

5. Lastly taxes on rental income are they very high in germany?
_Rental income is taxed at the same rates as any other income, which depend on your world income and range from 14 to 45% - you have to declare everything yearly and will need a tax consultant for this.
If you sell the property after less than 10 years, the profit will also be taxed._

Im wondering also why german property is so cheap - but is it a good way to live off the rental income if i buy 2-3 properties or is it too risky because rental laws are not much in favour of landlords. 
_Gross rental returns are 3 - 8% (depending on location, type of property, etc.). After deducting taxes, management and legal fees, repairs and renovations and possible loss due to non-paying tenants, you'll have 0 - 4% left. You decide whether this is worth the effort!_


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## Nononymous

If buying a rental property, a useful German phrase you will need to know is "Hartz IV Empfänger".


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## Sirtravelot

I'd only buy a house in Germany to live in. I'd be very reluctant in renting anything out in Germany.


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## Erick22

Most of Germans form West invest in Berlin


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