First Landlord Tax Return: Schedule V, AfA & Advertising Costs

As a private landlord, your rental operations are reported on Anlage V (Einkünfte aus Vermietung und Verpachtung, §21 EStG) as part of your annual income tax return. Rental income is taxed on a cash accounting basis (Zufluss- und Abflussprinzip, §11 EStG): income and expenses count in the calendar year they hit your bank account.

Core Deductible Expenses (Werbungskosten §9 EStG):

• Schuldzinsen: 100% of mortgage interest paid to your lender is tax-deductible against your income. Principal repayments (Tilgung) are not deductible (they build equity).
• AfA (Absetzung für Abnutzung): Linear building depreciation (2.0% for 1925–2022 stock; 3.0% for new builds or via shortened remaining useful life appraisal) calculated strictly on the building portion of the purchase price plus apportioned acquisition costs.
• Nicht-umlagefähiges Hausgeld: Property management fees (Verwaltergebühr) and actual maintenance costs.
• Anschaffungsnahe Herstellungskosten (§64 EStG): Invoiced net renovation costs within the first 3 years must not exceed 15% of the building purchase price, otherwise they are capitalized and depreciated over 33–50 years instead of being immediately deductible.

Not tax advice: consult a Steuerberater for your individual tax return.