Certain expenses incurred
in connection with the property can be offset against rental income
before income tax is levied. These include loan interest, travel
expenses, management charges and tax adviser charges. Depreciation
can also be offset, typically at 2% of the property value. Practically
this means that the owner of a buy-to-let apartment with say a 70%
mortgage will have little if any liability for income tax on their
rental income until either capital values or yields increase.
The German tax year corresponds to the calendar year, with a deadline
of 31st May the following year for submission of tax returns.