Private ownership or an Immobilien-GmbH: which questions should a first-time investor ask?

There is no universal winner in the private vs GmbH property investment question in Germany, and a headline tax rate does not settle it. A property company (Immobilien-GmbH) can pay about 15.8 per cent tax on rental profit, but only while the profit stays inside it and only if it meets strict trade-tax conditions all year. In exchange, it loses the tax-free private sale after ten years, cannot pass a rental loss to your salary, adds a second tax layer when money reaches you and costs more to run. Decide with a tax adviser (Steuerberater) before signing, because moving an apartment into a company later usually means paying real-estate transfer tax again.

This guide sets out the questions, not structuring advice. Couples should also read buying as a couple; private landlords' tax rules are in our tax overview.

Privately held rent is income from letting under § 21 EStG, taxed at your personal rate. A GmbH is a separate taxpayer: all its income counts as business income (§ 8(2) KStG), it pays corporation tax of 15 per cent (§ 23(1) KStG) plus a 5.5 per cent solidarity surcharge on that tax (§ 4 SolZG), and its activity always counts as a trade (§ 2(2) GewStG). Trade tax (Gewerbesteuer) is 3.5 per cent of trade income (§ 11(2) GewStG) multiplied by the city's multiplier (Hebesatz): 410 per cent in Berlin, 450 per cent in Dresden and 460 per cent in Leipzig. It is not a deductible expense (§ 4(5b) EStG), so the layers add up.

Rates for 2026. Corporation tax falls by one point a year from 2028 to 10 per cent from 2032 (§ 23(1) KStG). Sources for each row are in the sections below.

A mostly debt-financed purchase often shows a tax loss at first, as interest and depreciation exceed net rent (tax overview). Privately, a German resident can generally set that loss against salary in the same year. In a company, the loss stays inside and is carried forward against the company's own future profits (§ 8(1) KStG with § 10d EStG). A low company rate only matters once there is a profit to tax.

Money the company pays you is a dividend (§ 20(1) no. 1 EStG), on which the company withholds 25 per cent flat-rate tax (Abgeltungsteuer) plus solidarity surcharge (§ 32d(1) and § 43(1) no. 1 EStG). A shareholder with at least 25 per cent (or 1 per cent plus significant influence through working for the company) can apply instead for the partial-income method (Teileinkünfteverfahren): 60 per cent of the dividend is taxed at the personal rate, and 60 per cent of related costs is deductible (§ 32d(2) no. 3, § 3 no. 40(d) and § 3c(2) EStG). The choice binds for five years and, once revoked, cannot be made again.

Illustrative example. Fictional figures; every result is from a scripted calculation. €10,000 of rental profit in 2026, after interest, depreciation and running costs. GmbH: trade income equals the profit; interest stays below the €200,000 allowance, so none is added back (§ 8 no. 1 GewStG); the small basic deduction for property tax is ignored; the last row assumes the extended deduction applies in full. "Paid out" means the whole after-tax profit is distributed in the same year at 26.375 per cent, ignoring church tax and the €1,000 saver's allowance. Private: the same €10,000 taxed at a marginal rate of 42 or 30 per cent; solidarity surcharge (charged to a single filer only once income tax exceeds €20,350, § 3(3) SolZG) and church tax excluded.

Retained, every company pays less than either private owner. Paid out, a standard GmbH pays more than the 42 per cent investor, and even the extended-deduction company more than the 30 per cent one. The partial-income method changes the last figure only slightly at 42 per cent. No row includes the company's extra running costs, which come out of the same €10,000. The real question is how much profit you will leave in the company, and for how long.

On application, a company that exclusively manages and uses its own property can remove the trade income from that activity (the erweiterte Kürzung, § 9 no. 1 sentence 2 GewStG). "Exclusively" is read strictly. Under the tax authorities' joint guidance, one harmful activity costs the deduction for all the company's income that year (decree of the federal states, 17 June 2022, para. 5). Common traps:

• Extras for tenants. Income from other contracts with tenants, such as special services (decree, para. 23), is tolerated only up to 5 per cent of rental income, and electricity from solar panels or charging points up to 20 per cent (§ 9 no. 1 sentence 3(b) and (c) GewStG).
• Equipment and furniture. Letting operating equipment (Betriebsvorrichtungen) with the building excludes the deduction even in small amounts, unless it is a necessary ancillary part of letting the property (BFH, IV R 31/23). Furniture is not real property either, so plan furnished lets with your adviser first.
• Other assets. Two vintage cars held for appreciation, earning nothing, cost one company the deduction (BFH, III R 23/23).
• Letting to your own business. Property that serves a shareholder's business is excluded (§ 9 no. 1 sentence 5 no. 1 GewStG).

Without it, a GmbH gets only the basic deduction: since 2025, the property tax (Grundsteuer) booked as an expense in the year, replacing the former 1.2 per cent of the old assessed value (§ 9 no. 1 sentence 1 and § 36(4b) GewStG). For one apartment, that is small.

Privately, a sale more than ten years after purchase falls outside § 23 EStG (dates, exceptions and a pending bill to abolish it for let property: our ten-year guide). A GmbH has no such rule. The company's gain (the price less the depreciated book value) is taxed whenever it sells, with corporation tax and, unless the extended deduction holds for that year, trade tax. Timing matters: a company that sold all its property at the start of 31 December lost the deduction for that year (BFH, III R 1/23). Paying the proceeds out to you then adds the dividend layer.

Selling the shares instead follows other rules: for an individual holding at least 1 per cent, the gain is 60 per cent taxable (§ 17 EStG; § 3 no. 40(c) EStG), and a buyer who acquires 90 per cent or more of the shares triggers transfer tax (§ 1(3) GrEStG).

• Transfer tax again. The GmbH is a separate legal person. A sale to it is taxed on the price; a contribution for shares on the property's tax value (Grundbesitzwert) (§ 8(2) no. 2 GrEStG).
• Your own tax. Within ten years of your purchase, a sale to the company is a taxable private sale, and so is a hidden contribution (verdeckte Einlage) (§ 23(1) sentence 5 no. 2 EStG); the Federal Ministry of Finance treats a contribution against new shares as a sale too (see our ten-year guide). The gain includes the value growth (hidden reserves, stille Reserven) and the depreciation you claimed.
• The company's side. If it pays a market price, that price becomes its cost base and depreciation restarts on a higher figure: the mirror of your taxable gain. Have the Steuerberater model both.
• The loan and fees. Your mortgage does not move with the flat; repaying it early can cost compensation (Vorfälligkeitsentschädigung) (§ 490(2) BGB), and notary and land-registry fees are due again.

Transfer tax is the same whoever buys: 6 per cent in Berlin and 5.5 per cent in Saxony (SächsGrEStSatzG). The loan is different. A GmbH is not a consumer, so the Civil Code's consumer-loan rules do not apply to it (§ 13 and § 491 BGB). A new company has no track record, and banks frequently ask the managing director for a personal guarantee, especially at young or thinly capitalised GmbHs (Handelsblatt, May 2026). With a guarantee, limited liability does little for the loan. Ask lenders about equity, rate and guarantees before forming a company.

Once you and your advisers have settled the structure, Alpha Minoris's Buyer's Agent service coordinates the purchase in Berlin, Dresden or Leipzig, wherever you live: sourcing, viewings, document collection, the financing step, notary coordination and handover until the keys. Alpha Minoris does not advise on the choice of structure: that stays with your Steuerberater, lawyer and notary.

• Formation. The articles must be notarised (§ 2 GmbHG), share capital is at least €25,000 (§ 5(1)), and at least half must be paid in before registration (§ 7(2) GmbHG).
• Accounts. A GmbH is a commercial company (§ 13(3) GmbHG): double-entry books (§ 238 HGB), annual accounts with a balance sheet (Bilanz), profit and loss account and notes (§§ 242, 264 HGB), filed for the company register (§ 325 HGB); the smallest may deposit only the balance sheet (§ 326(2) HGB).
• Returns. Corporation and trade tax returns every year (§ 14a GewStG), even when no trade tax is due.
• Fees. A Steuerberater's fee for annual accounts falls within a statutory range (§ 35 StBVV). Get a written quote: on one apartment, a fixed annual cost can absorb much of the tax difference.
• Arm's length. Living in the company's flat, letting it cheaply to relatives or overpaying yourself can be a hidden profit distribution (verdeckte Gewinnausschüttung), which does not reduce the company's income (§ 8(3) KStG).

Some investors add a holding GmbH above the property company. Dividends it receives from a stake of at least 10 per cent are 95 per cent exempt from corporation tax (§ 8b(1), (4) and (5) KStG), and from trade tax with at least 15 per cent at the start of the year (§ 9 no. 2a GewStG), as is a gain on selling the property company's shares (§ 8b(2) and (3) KStG). That helps reinvestment, but money reaching you is still a dividend, and there are two sets of accounts.

Co-owners follow civil-code rules (our couples guide); shareholders follow the articles. Shares can be passed on in portions, but do not assume business relief from inheritance and gift tax: property let to others generally counts as non-qualifying administrative assets (Verwaltungsvermögen), with an exception for housing companies large enough to need a commercial operation (§ 13b(4) no. 1 ErbStG). For privately held property passed on by gift or inheritance, see gifted or inherited rental property.

Once your structure is settled with your advisers, the next decision is which apartment fits it. Discuss your first rental property with Alpha Minoris.