How long is the capital gains tax period for rented properties?

For rented properties held privately, the capital gains tax period under section 23 EStG is ten years. What counts is the time between the notarised purchase contract on acquisition and the notarised contract on sale. If you sell at a profit within this period, the gain is subject to income tax as a private disposal transaction. After ten years, a gain on privately held property is generally tax-free — check the current details with your tax adviser.

How much is capital gains tax?

There is no fixed rate for property capital gains tax (Spekulationssteuer). The taxable gain is added to your other income and taxed at your personal income tax rate. Your individual income situation in the year of sale therefore determines the actual amount. A specific calculation should be made by your tax adviser.

Does the notary date or the handover of keys count?

The dates of the notarised purchase contracts count for the capital gains tax period, both on acquisition and on sale. The handover of keys, purchase price payment and land register (Grundbuch) entry do not determine the period. If you intend to sell shortly before the ten years expire, plan the notarisation date carefully and seek tax advice beforehand if in doubt.

Property capital gains tax: the 10-year period explained • Loro

Q: Does the period also apply to owner-occupied property?

There is an exemption for owner-occupied property: a sale is tax-free even within ten years if you used the property as your own home in the year of sale and the two preceding years. Before planning a sale, ask your tax adviser whether your specific circumstances meet the requirements.

By Loro Real Estate team · Last updated: July 2026

If you sell a rented property before ten years have passed since purchase, you may have to pay income tax on the gain — commonly called property capital gains tax (Spekulationssteuer). For private investors, this is one of the most important tax rules because it helps determine when a sale may make sense for tax purposes. This guide explains what the tax involves, how to calculate the 10-year period correctly, the exemption for owner-occupied property and how taxable gains are calculated, including the often overlooked effect of depreciation (AfA).

A note before we begin: tax rules can change and depend heavily on individual circumstances. Please check all information against current rules and consult a tax adviser before making specific decisions.

What property capital gains tax means

The German term “Spekulationssteuer” is slightly misleading: this is neither a separate tax nor a separate tax rate. It refers to taxation of private disposal transactions under section 23 EStG. If you sell a privately held property at a profit within the statutory period, that gain counts as other income and is taxed together with your remaining income at your personal income tax rate.

This has an important consequence: there is no general answer to how much tax will be due. It depends on your total taxable income in the year of sale. If the property is sold only after the period has expired, a gain on privately held property is generally tax-free — one reason many investors plan for the long term from the outset.

Calculating the 10-year period correctly

For rented properties, the capital gains tax period is ten years. It begins with acquisition and ends with sale; the dates of the notarised purchase contracts determine both points. Neither the key handover, the purchase price payment nor the land register entry is relevant to calculating the period.

For example, if your purchase contract was notarised in March 2016, the period runs until March 2026. The sale falls outside the ten-year period only if the notarised sale contract is executed after that point. If you are considering selling shortly before expiry, plan the notarisation date carefully: a few days can determine whether tax is due. If in doubt, discuss the timing with your tax adviser first.

Owner-occupation exemption: when a sale is not a taxable private disposal

The law provides an important exemption for owner-occupied property. If you used the property as your own home in the year of sale and the two preceding years, the sale remains tax-free even within ten years. The exemption mainly concerns owner-occupiers; it does not apply to investments that have been rented out throughout.

Whether you meet the owner-occupation requirements depends on the details — for example, exactly how the property was used during the three years concerned. Before planning a sale, review these questions with your tax adviser under the current rules rather than relying on rules of thumb.

How the gain is calculated — and why depreciation increases it

In simplified terms, the taxable gain is the sale price less acquisition costs and costs directly associated with the sale. One point is often overlooked: depreciation (AfA) claimed during the rental period reduces the acquisition costs used in the calculation, increasing the taxable gain. The depreciation you deducted as rental expenses over the years is therefore effectively added back when you sell within the period.

A simple numerical example

Sale price: €300,000
Original acquisition costs including incidental costs: €250,000
Depreciation claimed during ownership: €20,000
Reduced acquisition costs: 250,000 − 20,000 = €230,000
Selling costs: €5,000

Taxable gain = 300,000 − 230,000 − 5,000 = €65,000

Without the depreciation adjustment, the gain would be €45,000: the €20,000 depreciation claimed increases the taxable gain by exactly that amount. The tax due depends on your personal income tax rate in the year of sale; giving a general percentage would be misleading. This example is deliberately simplified and cannot replace an individual tax calculation. You can explore how holding period, financing and property value changes work together in your overall calculation using your own figures in the interactive property investment calculator.

The three-property threshold: beware of commercial property trading

Private sellers should know a second threshold alongside the capital gains tax period: the three-property threshold. Anyone selling more than three properties within around five years risks the tax office treating this as commercial property trading, with significant tax consequences that can go beyond income tax on individual gains. The distinction depends on the circumstances and case law. If you plan several sales, or intend to sell inherited or gifted properties, discuss the situation with a tax adviser early.

What this means for buy-and-hold investors

For long-term investors, the ten-year period is more a planning framework than a threat. Buying an investment property for a long holding period from the outset — with a sound location, conservative figures and sustainable financing — helps avoid having to sell at short notice and potentially incur tax. After ten years, a privately held property can generally be sold tax-free; whether, when and at what price a sale succeeds still depends on market conditions. Property values can fluctuate, and properties have limited liquidity: a gain on sale is not guaranteed.

This long-term strategy focused on underlying value is the approach Loro Real Estate GmbH has followed since 2018, now supporting over 250 clients and more than 1000 managed units across Rhein-Neckar and Hessen: curated, vetted investment properties for long-term wealth accumulation, without buyer's brokerage commission or promises of a quick sale. If you would like to understand how the capital gains tax period fits your plans, contact us for a non-binding initial consultation; your tax adviser handles the detailed tax review.

This article is for information only and does not constitute investment, tax or legal advice.

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Property capital gains tax (Spekulationssteuer): the ten-year period explained