Real estate in your tax return - how to optimize your return

Fabian Rausch

Published on April 04, 2025 | Category: Taxes

Tax optimization is an often underestimated benefit for real estate investors. Many private investors do not exploit the full potential of their properties in terms of their tax burden. However, well thought-out tax planning can significantly improve your return and noticeably reduce the monthly burden.

In this article, you will find out which income-related expenses you can deduct as a landlord and how you can benefit from tax advantages during the year with the income tax reduction application and don't have to wait until the end of the year to file your tax return.

Advertising expenses: how to effectively reduce your tax burden

The purchase of an investment property opens up a number of tax advantages for you. Numerous expenses qualify as income-related expenses and can be offset directly against your rental income. The result: a significantly lower taxable income and therefore considerable tax savings.

The basic principle is simple - the higher your income-related expenses, the greater the reduction in your tax burden.

The most important deductible items

Interest on your financing: The interest portion of each loan installment is fully deductible - typically the largest item on your tax return.
Building depreciation (AfA): 2-3% depreciation is typical for existing or new properties - an expert opinion can allow a higher rate for old buildings.
Administrative expenses: All costs for property management, tax advice and similar services reduce your taxable income.
Maintenance expenses: Maintenance work, repairs and minor modernization measures are immediately tax deductible.
Non-recoverable ancillary costs: Costs that you bear yourself as a landlord, such as for administration, maintenance or insurance, also reduce your tax burden.
Travel costs to the property: You can claim EUR 0.30 per kilometer for each trip to view, hand over or inspect your property.
Insurance: All property-related insurances such as building, liability or loss of rent insurance are fully deductible.

Practical tip:
Collect receipts for small things too! Whether it's postage for tenant letters or the fee for an extract from the land register - these supposed peanuts quickly add up to a tidy sum.

Wage tax reduction application: Immediate tax savings instead of annual refund

A particularly effective but often overlooked tool is the income tax reduction application. Instead of waiting for the tax refund in the following year, you benefit immediately from your real estate advantages through a higher monthly net salary.

How does it work?

You submit your anticipated income-related expenses to the tax office. For example, interest payments, travel expenses, administrative costs. These are taken into account directly on your income tax card, your employer deducts less income tax and your monthly net salary increases accordingly.

A simple example:

This extra 260 euros a month will help you, especially as an employee with a regular salary. Especially at the beginning of a real estate financing, when every euro counts, this amount gives you important financial leeway.

You can simply submit the application informally to the tax office or make it even easier for yourself and use the ELSTER portal. Don't forget to renew the application every year!

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Conclusion: Taxes are not just a burden, but also an opportunity

Most real estate investors focus primarily on the purchase price, financing and rents, overlooking the extent to which tax benefits can influence their returns.

Take advantage of all tax benefits: consistently claim every permitted expense as an income-related expense and thus reduce your tax burden.
Think beyond the end of the year: plan your tax benefits not just for your tax return, but for the whole year.
Get your money back immediately: With the income tax reduction application you get more net every month instead of only when you get your tax refund.

Do you feel overwhelmed by all the tax stuff? A tax advisor can help you avoid missing out on any benefits. Especially if you own several properties, this investment is almost always worthwhile.