Taxes · 4 min read

Saving Tax with Property: How Owners Optimise Their Tax Burden

This guide refers to German law and the German tax system. It is a translation of our German original and does not replace individual tax or legal advice.

Since interest rates rose significantly in 2024, real estate as an investment has increasingly moved into the focus of investors. This is not just about large companies, but also about high-earning employees and self-employed people, who make up the largest part of the German property market. As a team of finance and real estate experts, we help you reduce your tax burden and secure your wealth in the long term with strategic property investments in Berlin. In this article, you will learn how real estate can help you save tax and which off-market properties in Berlin's most sought-after locations are particularly suitable for this.

Neo Capital specialises in tax optimisation for high-earning private individuals. With individual advice and data-driven investment strategies, we enable you to convert your tax burden into privately held wealth. Through tailored solutions and our network of finance and real estate experts, we work with you to develop a long-term investment strategy that both maximises your tax savings and secures your wealth.

Property investments as a tax advantage

Real estate offers not only a reliable source of income, but also a range of tax advantages that make it an attractive form of investment. If you opt for a property let to third parties, you can claim the costs of acquisition and upkeep for tax purposes. When buying a property, various tax advantages and subsidies can be claimed. It is above all high-earning employees and self-employed people who benefit from these options: the higher your income, the greater the tax scope you can use with an investment property.

Property investors also benefit from what is known as the leverage effect of borrowed capital. The principle is simple: by financing with bank loans, interest payments become tax-deductible, while at the same time the property increases in value. Ideally, rental income contributes to repayment, while tax depreciation further reduces your tax burden. Under German tax law, it is important to claim the interest together with other income-related expenses (Werbungskosten) in your tax return in order to use the tax advantages and reduce the overall cost of financing. In our article on the depreciation of new-build properties, we show you how to make optimal use of this principle.

Tax advantages through depreciation and financing

The greatest tax advantages with real estate come from depreciation for wear and tear (AfA, Absetzung für Abnutzung). This allows property owners to deduct part of the purchase price as well as the costs of renovations and modernisations from tax over several years. New-build projects in Berlin are particularly attractive here, as they not only allow higher depreciation rates, but also gain value in the long term thanks to state-of-the-art construction and energy efficiency.

Buyers of a freehold flat can also claim tax relief and deductions, particularly in relation to maintenance expenses and depreciation options, which is of particular importance for investors seeking a rapid return of capital for new investments.

A further important aspect is the ancillary costs of the property, which can be taken into account for tax purposes. These include estate agent fees, notary costs, management fees and many other expenses incurred in connection with the acquisition and management of your property. Considerable tax deductions and subsidies can be claimed especially when buying and renovating a house. In addition, real estate transfer tax (Grunderwerbsteuer) is payable when buying a house, which can be reduced in individual cases through appropriate contract structuring. As a result, investors can enjoy significant tax savings year after year, giving them additional capital for new investments.

Furthermore, after a holding period of ten years, it becomes possible to sell the property tax-free. This is particularly interesting for high-earning private individuals who plan for the long term and want to benefit from the increase in value. The sale proceeds can either be reinvested or used as capital for retirement provision. Our experts accompany you through every phase of your investment and advise you comprehensively on the tax framework and options.

Off-market properties in Berlin: exclusive opportunities for investors

A decisive advantage that Neo Capital offers its clients is access to exclusive off-market properties in Berlin. These properties are not marketed publicly and are only accessible to a small group of investors. Particularly in sought-after neighbourhoods, there are regularly new-build and existing projects with high rental income and excellent potential for growth in value.

The rising demand for such exclusive off-market properties in Berlin makes them an attractive investment opportunity that can not only build wealth, but also offers tax advantages.

Choosing the right property is crucial to getting the maximum tax savings and returns. Our experts analyse the market and your individual financial situation to find the ideal property for you. In doing so, we take into account both your tax and your financial goals. By combining strategic property selection with comprehensive tax advice, you achieve optimal performance on your investments.

Neo Capital: saving tax with real estate in the long term

Real estate as an investment offers the unique opportunity to save tax with property while building wealth at the same time. Neo Capital accompanies high-earning employees and self-employed people on this path and develops individual investment strategies tailored to your needs. Whether a new build or an existing property – we help you use the full potential of your investment and reduce your tax burden sustainably.

Are you interested in property investments in Berlin and would like to benefit from exclusive off-market properties? Arrange a no-obligation consultation with our experts today. Together we will develop a data-driven investment strategy that reduces your tax burden and secures your wealth.