Buying an Apartment in Germany: Top 3 Tips for Swiss Buyers

An investment property or a second home: If you live in Switzerland and want to buy an apartment in Germany, focus on three things: choosing the right German bank, planning for tax on rental income and negotiating the purchase price. These three tips will help you get started.

Tip 1: Choose a German Bank for Your Mortgage

Do you live in Switzerland and want to buy an apartment in Germany? You can arrange financing through a German bank. The bank can use the German property as collateral and take your Swiss income into account when assessing your mortgage application.

Swiss banks generally do not finance properties abroad because they cannot use foreign property as collateral. The right partner is therefore a German bank experienced in working with clients based in Switzerland. With a good credit profile and a suitable property, financing with a relatively small down payment is also possible; remember to budget for the additional purchase costs.

Tip 2: Make the Most of Rental Property Tax Benefits

Net rental income from your German apartment is taxed in Germany. Your Swiss salary does not increase the German tax rate applied to that income. If you have no other income in Germany, your net rental income will therefore tend to fall into the lower income tax bands, regardless of how much you earn in Switzerland.

You can also deduct a range of expenses for tax purposes in Germany. These include mortgage interest, renovation costs and depreciation of the building (AfA). For existing rental properties completed between 1925 and 2022, the annual depreciation allowance is 2% of the portion of the purchase price attributable to the building. This can add up to several thousand euros in annual deductions, further reducing the tax payable on your rental income.

Both the property and its income must also be declared in Switzerland. However, they are taken into account there for tax-rate purposes under the progression proviso.

Tip 3: Negotiate the Purchase Price

Interest rates are higher than during the low-rate years. This makes financing more expensive, but also creates opportunities to negotiate substantial discounts. This is particularly attractive for Swiss buyers with substantial capital: Buyers who put in more equity rely less on a large mortgage and can benefit significantly from lower purchase prices.

To put asking prices into context, use our maps for comparing property prices across Europe as a first regional overview.

Your Path to Owning an Apartment in Germany

Whether you are buying a rental investment or a second home, haaf – International Real Estate helps you find suitable properties and plan your purchase from Switzerland. Together, we look at location, price, financing and how you intend to use the property.

Would you like to discuss your options? Email us at info@haaf-international.com