Germany’s tax system penalizes home owners versus landlords, study shows

A study by the Institut der deutschen Wirtschaft (IW) finds that German homeowners who buy and live in their property face a significant tax disadvantage compared with landlords. Using a model of a €300,000 apartment in a major city, the analysis shows a self‑occupier would lose about €87,000 over 15 years, while a landlord could earn a return of nearly 9 % on the capital versus roughly 6 % for the owner‑occupier. The gap stems from landlords being allowed to deduct mortgage interest, maintenance costs and depreciation, benefits not granted to self‑occupiers.

Germany is the only country among six European comparators where tax rules favour renting over owning. In the Netherlands, France and Austria, self‑occupiers enjoy higher net returns. The study notes that only 44 % of Germans own their home, far below the EU average of about 70 %. IW property expert Michael Voigtländer suggests a land‑registry tax exemption for owner‑occupiers could promote home ownership, while stressing that worsening conditions for landlords would not be advisable.