An apartment is to be deliberately let at a reduced price, for example to support a close person. In the fictional German case the owner wishes to offer an affordable rent and still understand which of her own expenses she must continue to finance. She has heard that "50 percent is now sufficient." This shortened statement answers neither her tax question nor her household calculation.
The article contains editorial decision steps for long-term residential lettings in Germany. It does not calculate a personal tax benefit and in particular does not decide the complete tax recognition of a contract between relatives.
Name the support first as a personal decision
The owner clarifies which lower ongoing payment inflow she can actually bear. A deliberately chosen concession for the tenant can be a legitimate personal aim. The calculation should show this aim openly, rather than filling every missing income with an as-yet unexamined later tax advantage.
Our practical recommendation: set the available rent amount next to ongoing property payments, financing and remaining reserve. A possibly deductible expense is not treated as an expense fully reimbursed by the tax office. Whether and when a tax effect will occur requires an individual calculation.
Distinguish the two statutory thresholds correctly
According to § 21 Absatz 2 EStG a residential letting at less than 50 percent of the local customary market rent is divided into a remunerated and a non-remunerated part. For a long-term letting it is considered remunerated from at least 66 percent. [ESTG]
For at least 50 but less than 66 percent the Landesamt für Steuern describes a total surplus prognosis. A positive result thus allows full deduction of income-related expenses; if the result is negative a division is made. [LFST] "50 percent always suffices for the same deduction as the full rent" would therefore be wrong.
These rules do not finally decide whether each individually claimed expense is at all an income-related expense. Other requirements of the specific tax case also remain to be examined.
Construct numerator and comparison amount the same way
The tax administration explains the local customary gross rent as cold rent plus the costs allocable under the Betriebskostenverordnung. [LFST] A pure cold rent on one side and a sum including ancillary costs on the other would not be a suitable comparison.
In the fictitious calculation example the professionally still-to-be-confirmed customary comparative figure is assumed to be 1.000 euros per month. An agreed and actually paid remuneration of 600 euros, constructed in the same way, would correspond to 60 percent. That would place the model case in the described prognosis range. The figures are not market values and not a rental proposal.
The owner has the actual comparison basis determined. A particularly expensive single advertisement from the internet is not automatically the confirmed tax benchmark for her apartment. Condition, location and fittings must match for the comparison.
Do not replace a prognosis with a good month
The information sheet describes the total surplus prognosis as a consideration of the expected rental duration and the income compared with income-related expenses. [LFST] A current positive account balance is a different calculation. Loan repayments, liquidity and tax deductibility must not be mentally conflated.
The owner therefore provides full documentation on the planned tenancy, on property expenses and on financing for the tax advisory. She does not invent a blanket future surplus and does not calculate with automatically increasing rents if such changes are not appropriately agreed or legally clarified.
Manage agreement and later course together
The rented object, payments and actual performance should remain comprehensible. This does not replace legal contract drafting. Especially with relatives, additional recognition questions are discussed purposefully with the tax adviser; the percentage calculation alone does not answer them.
If payments or the relevant comparison basis change, the earlier calculation is not used permanently as an immutable confirmation. A personal follow-up appointment helps to reconcile the decision made with the actual circumstances.
In the end the owner knows what support she wants to give, which cash requirement she bears herself and which tax examination applies to her case. A low rent is thereby not automatically wrong or right. It becomes a deliberate decision with comprehensible financing and clearly delineated tax assumptions.