Investment Property Calculator
Is a rental property worth it? From price, purchase costs, rent, running costs and financing, get gross and net rental yield, cash flow and price-to-rent ratio.
Gross Rental Yield
4.32%
Net Rental Yield
2.59%
Monthly Cash Flow before Tax
-€392.42
Investment
Annual Income Statement
Tax View (Year 1)
Straight-line depreciation (AfA) under § 7(4) EStG on the building share of the acquisition cost including a proportional share of purchase costs; land is not depreciated. Deductible expenses: loan interest, non-recoverable costs, management and maintenance (simplified; strictly speaking, payments into the owners' association maintenance reserve only become deductible when the association spends them). Loan repayment is not deductible. Return on equity = (net rent − loan interest ± tax effect) / equity: repayment counts as wealth building, and no increase in property value is assumed. All figures for the first year.
Note: These calculations are for informational purposes only and do not replace professional tax or financial advice. All information without guarantee.
FAQ
Frequently Asked Questions
What return can I expect from an investment property?
Gross rental yield in Germany typically ranges from 3-6% depending on location. Net yield after deducting management costs, maintenance reserves, and vacancies is usually 1-3 percentage points lower.
What tax advantages do investment properties offer?
Landlords can deduct depreciation (2-3% per year), loan interest, maintenance costs, and management expenses. After ten years, capital gains from property sales are tax-free.
Are my entered amounts stored anywhere?
No. All calculations happen exclusively in your browser. Your inputs are never sent to our server or stored. You can safely enter sensitive financial data.
Guide
What is the Investment Property Calculator?
This calculator computes the return and viability of a property as an investment, including rental yield, cash flow and tax effects.
How does the Investment Property Calculator work?
Enter purchase price, ancillary costs, rental income, running costs and financing, plus the building share, year of completion and your marginal tax rate. The calculator determines gross and net rental yield, monthly cash flow before and after tax, the first-year tax effect of depreciation, loan interest and deductible expenses, and the return on equity before and after tax.
Key Data and Facts
Gross rental yield = annual cold rent / purchase price. Net yield after operating costs (approx. 20-30%). Residential depreciation, straight-line (§ 7(4) EStG): 3% if completed in 2023 or later, 2% for 1925-2022, 2.5% before 1925. Vacancy risk: approx. 2-4%.
Step-by-Step Guide
How to calculate the return on an investment property step by step: 1. Determine the purchase price and ancillary costs: purchase price + real estate transfer tax + notary + broker if applicable = total investment. 2. Determine the annual net cold rent: monthly cold rent x 12. 3. Gross rental yield: annual cold rent / purchase price x 100. 4. Deduct operating costs: property management, maintenance, rent default risk (about 20-30 % of the rent). 5. Net rental yield: (annual cold rent - operating costs) / total investment x 100. 6. Calculate the cash flow: net rental income minus loan instalment. 7. Tax effect: depreciation (AfA) on the building share of the acquisition cost (incl. a proportional share of ancillary costs), loan interest and deductible expenses reduce the rental income for tax purposes; loan repayment is not deductible. A tax loss saves tax equal to the loss times your marginal rate. 8. Return on equity: (net rental income - loan interest) / equity; repayment counts as wealth building. Example: condominium 200,000 EUR, ancillary costs 20,000 EUR, equity 40,000 EUR. Cold rent 800 EUR/month = 9,600 EUR/year. Gross rental yield: 9,600 / 200,000 = 4.8 %. Operating costs incl. vacancy (25 %): 2,400 EUR. Net rental yield: 7,200 / 220,000 = 3.27 %. Financing: 180,000 EUR loan, 3.5 % interest, 2 % repayment. Monthly instalment: 180,000 x 5.5 % / 12 = 825 EUR. Monthly cash flow before tax: 7,200 / 12 = 600 EUR - 825 EUR = -225 EUR. Depreciation for a building completed between 1925 and 2022 (2 %) on an 80 % building share of 220,000 EUR = 176,000 EUR: 3,520 EUR/year. Rental income for tax: 7,200 - 6,300 interest - 3,520 depreciation = -2,620 EUR. At a 42 % marginal tax rate: about 1,100 EUR tax saving per year (about 92 EUR/month), cash flow after tax about -133 EUR/month. Return on equity: (7,200 - 6,300) / 40,000 = 2.25 % before tax, (900 + 1,100) / 40,000 = 5.0 % after tax.
Calculation Example
Flat for 200,000 EUR + 20,000 EUR purchase costs, equity 40,000 EUR. Rent excluding utilities: 800 EUR/month. Gross rental yield: 4.8%. Net rental yield: 3.27%. Loan 180,000 EUR, instalment 825 EUR/month. Cash flow before tax: 600 - 825 = -225 EUR/month. Depreciation 2% of 176,000 EUR = 3,520 EUR; tax loss 2,620 EUR, at a 42% marginal rate about 1,100 EUR tax saving per year. Cash flow after tax: about -133 EUR/month.
Sources
Official sources
Calculations are based on applicable German laws and official data:
- Deutsche Bundesbank
- Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
- Statistisches Bundesamt (Destatis)
Full methodology at Methodology.
Reviewed by Konstantin Iakovlev · Last updated:
Finance
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