Germany study shows landlords enjoy tax advantage over homebuyers

A study by the Institute of the German Economy (IW) finds that German tax rules favor landlords over those who buy and live in their own homes. Only 44 % of Germans own their residence, far below the EU average of about 70 %, and the study attributes part of this gap to tax treatment.

The model assumes a €300,000 property financed at 80 % and held 15 years. Landlords achieve a 7.1 % annual equity return versus 5.0 % for owner‑occupiers, leaving landlords about €34 000 richer per property. In the seven largest German cities the gap translates to more than €87 000 per 100 m² compared with self‑use.

Compared with the Netherlands, Austria, Denmark, Belgium, France and Ireland, where owner‑occupied housing receives equal or better tax treatment, Germany’s system is described as a “special path”. The authors recommend measures such as lowering the real‑estate transfer tax or providing tax allowances for owner‑occupiers, while warning that reducing landlord incentives could slow investment in rental housing and worsen shortages.