Furnished rentals in Germany 2026: tax, deposits, inventory and short‑let rules

Which tax rules apply to furnished rentals?

Income from letting furnished apartments is generally taxable under the German Einkommensteuergesetz as income from letting and leasing (Einkünfte aus Vermietung und Verpachtung, § 21 EStG). That means gross rents are declared on the income tax return and usual deductible expenses (advertising costs/"Werbungskosten") — interest on loans, maintenance, insurance, property management fees, and depreciation — can be offset against those rents. The federal statute is § 21 EStG; use that as the starting point when preparing returns. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/estg/__21.html?utm_source=openai))

A practical but important caveat: purely renting a furnished flat normally remains § 21 activity. If you provide hotel‑style services (regular cleaning, reception, organised meals or substantial

Deposit rules — what you must know (§ 551 BGB)

The legal cap on a deposit for residential lettings is statutory. Under § 551 of the Bürgerliches Gesetzbuch a residential landlord may demand at most three times the monthly net cold rent (the rent excluding service charges shown as flat or advance payments). The first instalment is due at the start of the tenancy; a landlord who takes a cash deposit or financial guarantee must treat it as tenant property and is subject to rules about separate safekeeping and paying interest to the tenant. Use the text of § 551 BGB when drafting tenancy terms. Non‑compliance risks claims and court orders. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/bgb/__551.html?utm_source=openai))

Practically: do not promise or retain the deposit as part of ordinary business cash; open a separate interest‑bearing account, note the deposit in your records and be ready to return unused amounts promptly after the tenancy ends.

Furniture and inventory — immediate write‑off (GWG) vs. AfA depreciation

Movable items you place into a rental (beds, sofas, wardrobes, kitchen appliances) are taxable assets. Two federal rules determine treatment:

- Small items ("geringwertige Wirtschaftsgüter", GWG): under § 6 EStG the net acquisition cost threshold for immediate write‑off in the year of purchase is €800 (single‑item limit). If an item costs €800 or less (net of recoverable VAT), you may expense it in the acquisition year. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/estg/__6.html?utm_source=openai))

- Items above that threshold must be capitalised and depreciated over their useful life under the general AfA rules in § 7 EStG. § 7 sets the legal framework; typically taxpayers apply the official AfA tables or a tax advisor’s guidance to pick a useful life and a straight‑line rate. Do not guess useful lives in isolation — ask your tax advisor or use the published AfA tables when filling the return. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/estg/__7.html?utm_source=openai))

Record every piece of inventory: date, net cost, invoice, and whether it was treated as GWG or capitalised. For furnished flats this record is the principal evidence if tax authorities query the treatment.

Short‑lets and municipal Zweckentfremdung rules — what to check

Municipal rules govern whether and how you may let a dwelling short‑term. Cities often use Zweckentfremdungssatzungen (local ordinances) or state frameworks to limit tourist or commercial short lets and to protect housing stock. For example, Cologne requires that short‑term rentals be notified and limits rent‑days: short lets are generally limited to 90 days per calendar year for a single dwelling unless you obtain a formal purpose‑change permit and a Wohnraum‑Identitätsnummer. The Cologne municipal pages set out the 90‑day rule and the notification/permit procedure. ([stadt-koeln.de](https://www.stadt-koeln.de/artikel/62031/index.html?utm_source=openai))

Berlin’s Zweckentfremdungsverbot also requires permissions and contains provisions on temporary letting (the statute and its implementing rules specify when permission is needed and when Ersatzwohnraum must be created). Check the municipal portal for fees, application forms and penalties before advertising short lets. Non‑compliance exposes you to fines and orders to end the letting; it does not change federal income‑tax law but it can remove the income stream you expected. ([parlament-berlin.de](https://www.parlament-berlin.de/ados/19/IIIPlen/vorgang/verordnungen/vo19-225.pdf?utm_source=openai))

Practical checklist for investors and expat landlords

1) Treat furnished rent like other rental income: declare under § 21 EStG and keep full records of income and expenses. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/estg/__21.html?utm_source=openai))

2) Hold the deposit in a separate, interest‑bearing account and respect the three‑month cap of § 551 BGB. ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/bgb/__551.html?utm_source=openai))

3) Inventory: record every item, apply the GWG rule for items ≤ €800 (§ 6 EStG) and capitalise/afA items above that limit (§ 7 EStG). ([gesetze-im-internet.de](https://www.gesetze-im-internet.de/estg/__6.html?utm_source=openai))

4) Check the municipality: if you plan short lets, verify local rules (e. g. Köln 90‑day cap, Berlin permission requirements) before listing. Municipal permission or registration may be required and fees/fines apply. ([stadt-koeln.de](https://www.stadt-koeln.de/artikel/62031/index.html?utm_source=openai))

5) When in doubt about classification (private landlord vs. commercial operator) or the correct depreciation schedule, instruct a German tax advisor. This article is explanatory, not personalised tax advice.