Immobilien GmbH – German Real Estate Loophole for Leasing, How-To Guide

Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – Let us help you optimize your taxes, and pay less for your German real estate. How to save money, by forming a so-called immobilien GmbH. You will learn the basics about the topic real estate company. When buying a house or a condominium, who comes up with the idea of founding a GmbH? Admittedly, it doesn’t make sense for self-interest, but it does for renting.

Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

What is an Immobilien GmbH?

Definition Immobilien GmbH – An Immobilien GmbH is a real estate company. Meaning a company that pursues the purpose of leasing, development, financing, realization or marketing. It is independent whether it concerns one or several real estates. It also includes the property management, for its own properties and those of third parties.

Are you looking to save more on your property investment in Germany? Our full guide:

Tax Advantage: GmbH instead of Private

To cut a long story short, where is the advantage? With a tax rate of 42 percent, private leasing means you can quickly pay 4-digit sums a year in taxes. Below a comparison, once using a private ownership and once with a GmbH ownership.

Example: Calculation of Private Rental Income

Here a very simplified calculation, for a fast comparison of the taxation of private renting incomes compared with commercial incomes of a GmbH. No tax allowances and no solidarity surcharge are taken into account here either.

Simplified example calculation (private):

  • Monthly rental income: 1.000 Euro
  • Rental income / year: 12.000 Euro
  • Tax burden (income tax 42%): 5,040 Euro
  • Profit after taxes: 6,960 Euro

Example: Calculation of Commercial Rental Income

Here a very simplified calculation, for a fast comparison of the taxation of private renting incomes compared with commercial incomes of a GmbH. No allowances are taken into account here either.

Simplified example calculation (GmbH):

  • Monthly rental income: 1.000 Euro
  • Rental income / year: 12.000 Euro
  • Tax burden (corporate income tax 15%): 1.800 Euro
  • Profit after taxes: 10,200 Euro

The difference is here, in our simplified invoice:

+ 3.240 Euro / year

Real Estate Company or Familienstiftung?

Starting a Stiftung, aka Foundation, especially a family foundation, has many advantages for you. From tax-free capital gains after speculation tax to low, 15 percent taxation of rental income.

The big and central difference to the Immobilien GmbH, after the speculation period, you can sell your real estate tax-free. How this works, how you can set up a foundation and how your grandchildren will profit from it, you will learn in this article.