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How high earners can save taxes with real estate: Strategies for wealth accumulation and tax optimization
For high earners, real estate not only offers an attractive opportunity to build up assets, but also numerous opportunities to save tax. By investing wisely and making targeted use of tax advantages, considerable sums can be saved - especially for people with a high income. Below you can find out exactly how this works and which strategies are particularly worthwhile.
1. depreciation as a tax lever
One of the biggest advantages of buying a property is the possibility of depreciation (depreciation for wear and tear) by means of remaining useful life appraisals and purchase price allocationof a rented property. In the case of rented properties, high earners can claim 2% of the building costs (if built after 1924) against tax each year for 50 years. Even higher rates often apply for old buildings or listed properties. This depreciation reduces the taxable rental income and thus effectively reduces the tax burden.
2. deduct business expenses relating to the property
Anyone who rents out a property can deduct all income-related expenses for tax purposes. These include estate agent fees, notary fees, land registry fees, travel costs to the property, maintenance, insurance and even property management. In this way, high earners can specifically reduce their income from letting and leasing and significantly lower their tax burden.
3. make clever use of financing costs
Interest on real estate loans is also a deductible cost. Interest payments have a positive tax effect, especially if you have a high level of debt financing. Important: Only the interest (not the repayment) is deductible. In phases of low interest rates, targeted, strategic financing can help to optimize the tax burden and at the same time benefit from increases in value.
4. tax-free sale after ten years
Another major advantage: after a holding period of ten years, the sale of rented properties is tax-free (Section 23 EStG). High earners can thus benefit from rising property prices and realize profits after the speculation period has expired - without any income tax. There is considerable potential for wealth creation here, particularly with high-quality properties in growth regions.
5. listed properties and refurbishment properties
The acquisition of listed properties or refurbishment projects offers additional tax incentives. For listed properties, up to 9% of the refurbishment costs can be written off over 10 years - in addition to the regular depreciation. This makes such properties particularly attractive for top earners, as high investments can be significantly cushioned against tax.
6. real estate GmbH: tax structure for professionals
For very high incomes or larger real estate portfolios, it may make sense to set up a real estate GmbH. Here, rental income is taxed at the lower corporation tax rate of around 15% - instead of the personal income tax rate of up to 45%. In addition, the GmbH structure offers numerous structuring options for asset transfer and succession planning.
7. take advantage of special depreciation allowances for new buildings
As part of certain subsidy programs - e.g. for the creation of rental housing - additional special depreciation allowances can be claimed. These offer short-term tax relief for high earners and at the same time promote investment in new builds. The prerequisite is usually a certain rent level and energy standards.
8 Conclusion: Real estate as the key to tax optimization
High earners benefit from investing in real estate in several ways: they create long-term value, generate regular rental income and reduce their personal tax burden through targeted tax utilization. A well thought-out real estate strategy - ideally supported by an experienced tax advisor - can help to fully exploit the available potential and secure assets in the long term.