Anyone selling a rented condominium or an income-producing property faces a different tax situation than a homeowner: The exemption for owner-occupied properties does not apply here. If you sell within ten years of purchasing, the entire profit is taxable as a private sale transaction—and due to depreciation, it is often higher than many owners expect. We show you when speculation tax applies, how to calculate the profit, and which strategies can reduce or completely avoid it.
Why Rented Properties Are Treated Differently for Tax Purposes
When selling a property, the tax office makes a strict distinction between owner-occupied residential property and a rented investment property. There is a generous exception for owner-occupied property: Anyone who lived in the property themselves in the year of the sale and in the two preceding years can sell tax-free—regardless of how long the property was owned (Section 23 (1) no. 1 EStG).
This owner-occupation exemption does not apply to a property that has been rented out continuously. As an investor, you have never used the property for your own residential purposes—so the general rule applies: The profit from the sale is a private sale transaction within the meaning of Section 22 no. 2 EStG and is fully subject to income tax within the ten-year period. This is precisely the crucial difference that surprises many landlords.
The Ten-Year Period: When Does It Begin and End?
Speculation tax is linked to the so-called ten-year speculation period. What matters is not the date of registration in the land register or the handover of the keys, but the date on which the purchase agreement is notarized—both for the purchase and the sale. The Federal Fiscal Court confirmed this approach again in 2026: The notary appointment, not the subsequent transfer of ownership in the land register, determines the beginning and end of the period.
An example: If the purchase agreement was notarized on 15 May 2017, the ten-year period ends on 15 May 2027. If you notarize the sale one day later, the profit is tax-free. It may therefore be worthwhile to deliberately schedule the notary appointment and not sell shortly before the period expires.
How to Calculate the Taxable Profit
The taxable profit is the difference between the sale price and the acquisition or production costs, reduced by the selling expenses (Section 23 (3) of the German Income Tax Act). For rented properties, another factor is added that significantly increases the gain: depreciation.
The depreciation for wear and tear (AfA) claimed during the rental period reduces the acquisition costs. In other words: The tax office recovers all depreciation deductions with which you reduced your rental income over the years when you sell the property, through a higher capital gain. This is the most important tax difference compared with an owner-occupied property, for which no AfA is incurred.
The selling expenses that reduce the gain include, among others:
- the estate agent’s commission, insofar as you bear it
- costs for advertisements and exposés
- an early repayment penalty for repaying the loan early
- notary fees for deleting land charges
Calculation example
An investor buys a rented apartment in 2019 for 300,000 euros and sells it in 2026—i.e., within the ten-year period—for 380,000 euros. Over the rental years, he claimed 40,000 euros in AfA. For the sale, he pays 15,000 euros in agent’s fees, advertising costs and early repayment costs.
- Sale price: 380,000 euros
- Acquisition costs: 300,000 euros
- less AfA: −40,000 euros → relevant acquisition costs 260,000 euros
- less selling expenses: −15,000 euros
- taxable gain: 105,000 euros
Without adding back the AfA, the gain would be only 65,000 euros. The depreciation alone increases the tax base in this case by 40,000 euros—an effect that many sellers underestimate.
How high is the speculation tax?
There is no fixed “speculation tax” with its own tax rate. The gain is added to your other taxable income for the year of sale and taxed at your personal income tax rate—plus solidarity surcharge and church tax, where applicable.
In the example above, a gain of 105,000 euros at a top tax rate of 42 percent would trigger approximately 44,100 euros in tax. Because the gain increases your annual income, it may also push you into a higher progressive tax bracket—another reason to plan the timing of the sale carefully.
When does the sale remain tax-free?
There are several ways in which the sale of a rented property can remain tax-free or tax-advantaged:
- After the expiry of the Ten-year period: If you sell only after more than ten years, the entire profit is tax-free – regardless of its amount.
- Exemption threshold of 1,000 euros: If your total profit from private sales transactions in a calendar year remains below 1,000 euros, no tax is due (since 2024; previously, the threshold was 600 euros). This is an exemption threshold, not a tax allowance – even 1 euro above it makes the entire profit taxable. For properties, however, this threshold is rarely reached because profits are usually high.
- Owner-occupation before the sale: If you move in yourself in good time, the sale may become tax-free – provided that you occupy the property exclusively yourself in the year of sale and the two preceding calendar years. Continuous owner-occupation spanning the change of year may already be sufficient for this.
Losses from such a sale – for example, when prices are falling – may be offset only against profits from other private sales transactions, not against your employment or rental income.
Three-property rule: When the sale becomes commercial
If you sell several properties within a short period, private asset management may become a commercial property business. The rule of thumb is the three-property rule: Anyone who buys and resells more than three properties within approximately five years is generally classified as a commercial property trader (§ 15 EStG).
The consequences are significant: In addition to income tax, trade tax is then also payable, and the protective ten-year period no longer applies. The rule is not a rigid law but has been shaped by case law – in individual cases, even the sale of a single property built shortly beforehand may be considered commercial. Anyone wishing to sell several properties should have this assessed in advance for tax purposes.
Advantages and disadvantages for capital investors: sell now or wait out the period?
For investors, the decision often comes down to one question: sell within the period and pay tax – or wait until the ten years are complete?
- Advantage of waiting: Once the period has expired, the entire profit is tax-free. With substantial increases in value, you can quickly save a five-figure sum.
- Advantage of selling within the period: You secure a good market price, get rid of administrative work and rental risk, and do not tie up your capital longer than necessary.
- Disadvantage of waiting: The market, interest rates, and the property's condition may deteriorate. A certain tax saving may be offset again by a falling sale price.
- Disadvantage of selling within the period: The tax on the profit – including the recaptured depreciation (AfA) – noticeably reduces your return.
There is no blanket answer. Calculate both scenarios and take your personal tax rate, the expected price, and the date of the notarial appointment into account when making your decision.
FAQ on the Speculation Tax for Rented Properties
Do I always have to pay speculation tax when selling my rented apartment?
No. Tax is only due if you sell within ten years of purchasing the property and make a profit in the process. After the ten-year period has expired, the sale is tax-free.
Why is my taxable profit higher than the pure increase in value?
Because the depreciation claimed during the rental period reduces the acquisition costs. The depreciation deductions that reduced your rental income over the years increase the taxable profit when you sell within the period.
Which date counts as the beginning of the ten-year period?
The date of notarization of the purchase agreement – not the land registry entry or the handover. The same applies to the sale.
Can I avoid speculation tax by using the property myself?
Yes, under certain circumstances. If you use the property exclusively yourself in the year of sale and the two preceding calendar years, the sale is tax-free. However, this exception does not apply to a property that has been rented out continuously.
What is the tax rate on the profit?
Your personal income tax rate applies, as the profit is added to your other income. Depending on your income, this can be up to 42 or 45 percent, plus the solidarity surcharge and church tax, where applicable.
Conclusion: The Period and Depreciation Determine the Tax
When selling a rented property, the ten-year period is the main factor determining the tax burden. Anyone who sells within the period must tax the full profit at their personal rate – and, due to the addition of the depreciation (AfA), often pays more than the mere price difference would suggest. Therefore, before every sale, check when the period ends, how high the actual profit is, and whether waiting, prior personal use, or a deliberately placed A notary appointment is worthwhile. For larger amounts, the advice of a tax consultant is money well invested. Through TraumImmo, you can then find the right platform to sell your investment property at the best possible time.