You have inherited a flat and are wondering: should you rent it out or sell it? The answer doesn't lie in your gut feeling but in solid calculations. This guide shows you how to calculate the actual rental yield of your inherited flat in four steps, so you can fully maximize its financial potential.
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The topic briefly and concisely
The calculation of rental yield for an inherited apartment must always be based on the current market value, not on old purchase prices or estimated values from the certificate of inheritance.
The net rental yield is crucial and is often significantly lower than the gross yield once non-recoverable costs such as management and maintenance (approximately 15-25% of the basic rent) are deducted.
Realistic calculations must necessarily take into account risks such as vacancies (on average 2-5%) and personal tax liabilities on rental income (up to 45%).
Inheriting a property presents many with a complex decision. Often, the emotional value is highly regarded, but the financial success of renting it out depends on hard numbers. A superficial assessment is not enough, because non-apportionable costs, taxes, and risks can quickly halve an apparently attractive gross yield. To make an informed decision, you must accurately determine the net rental yield. We guide you through the entire process – from the correct valuation of the property to the final yield figure after deducting all relevant items. This establishes a reliable foundation for your strategy.
Step 1: Define the current market value as the correct basis
The most common mistake when calculating the rental yield of an inherited apartment is using an incorrect starting value. Neither the original purchase price nor the value stated in the certificate of inheritance is relevant. The only correct basis is the current market value of the property, which is the price you would achieve if you sold it today. This value acts as your hypothetical purchase price. A professional valuation can provide up to 20% greater accuracy than purely online estimates. Only with this realistic value can you determine a meaningful yield. What an inherited property is worth depends on dozens of factors that only an expert can accurately assess. This solid data foundation is the essential first step for all further calculations.
Step 2: Determine the gross rental yield as the first indicator
The gross rental yield provides an initial, quick orientation. The formula for this is simple: (annual net cold rent / current market value) x 100. Suppose the market value of your inherited flat is €350,000 and you can achieve a monthly cold rent of €1,050, which amounts to €12,600 per year. The gross yield is therefore (€12,600 / €350,000) x 100 = 3.6%. This figure is a good starting point, but be cautious: it presents an incomplete picture as it ignores essential costs. To set the rent, you should determine current rental prices online and check any regulations such as the rent control. The gross yield serves only as an initial benchmark before the crucial deductions are made.
Step 3: Clarify the net return by deducting all costs
The true profitability is only shown by the net rental yield. For this, you deduct all costs from the annual cold rent that you, as a landlord, have to bear and cannot pass on to the tenant. These non-apportionable service charges often account for 15% to 25% of the cold rent. Many heirs massively underestimate these ongoing expenses.
The most important non-apportionable costs include:
Management fees: Fees for property management, often between €20 and €30 per month and unit.
Maintenance reserve: Essential for unexpected repairs to communal property. Experts recommend setting aside about €8 to €11.50 per square metre annually.
Repair costs for private property: Costs for repairs within the apartment that do not affect the community.
Bank charges: Account management fees for the rental account.
Rental loss risk: A calculated buffer for vacancies or insolvent tenants, often set at 2-4% of the annual rent.
After deducting these costs from our example, a new picture emerges, bringing us closer to the final yield.
Step 4: Include risks and taxes in the final calculation
In the final step, you need to consider risks and your personal tax burden. The biggest risk is vacancy, whose rate in Germany varies greatly depending on the region, but can average around 4.5%, with values below 3% being common in metropolitan areas. Additionally, your rental income, after deducting all advertising costs (such as interest, depreciation, and maintenance), is subject to your personal income tax rate, which can be up to 45%. For inherited properties, you can continue the depreciation (AfA) of the previous owner, which reduces your tax burden. The linear depreciation (AfA) for buildings constructed after 1924 is 2% per year on the building's value. Don't forget the one-time burden of the inheritance tax, which applies depending on the degree of kinship and allowances (e.g. €400,000 for children). Only after accounting for these factors will you obtain the actual return on equity.
The final return calculation: A concrete example
Let's combine all factors in a final sample calculation to determine the actual rental yield for an inherited apartment. This highlights how significantly the net yield differs from the gross yield.
Starting point:
Market value of the apartment: €350,000
Annual net rent: €12,600 (€1,050 / month)
Building value share (for depreciation): €280,000 (assumption: 80%)
Annual costs and deductions:
Maintenance reserve (80 m² x €10): - €800
Administrative costs (€25 x 12): - €300
Calculated vacancy risk (3%): - €378
Depreciation (2% of €280,000): - €5,600
Taxable income: €12,600 - €800 - €300 - €378 - €5,600 = €5,522
Income tax (assumption 30%): - €1,656.60
Net rental income after tax: €12,600 - €800 - €300 - €378 - €1,656.60 = €9,465.40
Final net yield: (€9,465.40 / €350,000) x 100 = 2.70%
This result shows that the actual yield is significantly below the initial gross yield of 3.6%. Such a data-driven analysis is essential. If you are uncertain about evaluation or calculations, our ImmoGPT chat can provide you with an initial, quick assessment.
Yield in Context: Renting compared to Alternatives
A yield of 2.70% is a solid figure, but it needs to be put into perspective. Compare this yield with alternative investment opportunities. A broadly diversified stock ETF portfolio has historically produced an average return of about 7% per annum. Even less risky investments like fixed deposits currently offer interest rates of 3% to 4%. Of course, a property also offers the potential for an increase in value, which is not included in this yield calculation. This decision – to rent or to sell – ultimately depends on your personal risk tolerance and your overall financial strategy. However, an accurate yield calculation is the foundation for making any meaningful comparison.
mietrendite-fur-eine-geerbte-wohnung-berechnen
The correct calculation of the rental yield for an inherited apartment is a multi-step process that goes far beyond a simple gross calculation. The decisive factor is the consistency with which all non-recoverable costs, maintenance reserves, tax aspects such as depreciation, and personal risks are factored in. Only in this way can a realistic net yield, often below 3%, be derived from an initial estimate of 3-4%. This figure is the only true benchmark for objectively assessing the profitability of renting and weighing it against a potential sale profit. Your decision for the future of your inheritance should be based on this solid, data-driven foundation.
Additional useful links
Statistisches Bundesamt (Destatis) offers a table on rents and disposable household income in Germany.
Statistisches Bundesamt (Destatis) provides general information on the topic of housing.
The Federal Ministry of Finance provides information on inheritance and gift tax.
A statement from the Federal Ministry of Finance explains the adjustment of the Inheritance and Gift Tax Act.
Statistisches Bundesamt (Destatis) provides information on construction prices and the property price index.
The Deutsche Bundesbank provides an indicator system for the residential property market.
The Deutscher Städtetag publishes a position paper on the housing construction crisis.
The VDP (Association of German Pfandbrief Banks) offers its property price index.
FAQ
What value is used for calculating the rental yield in the case of an inheritance?
For a realistic calculation of returns, the current market value of the property at the time of consideration (renting vs. selling) is always used. This value represents your hypothetical acquisition costs.
What are non-allocable incidental costs that reduce my yield?
These include all costs that you cannot pass on to the tenant through the operating cost statement. The most important ones are costs for property management, bank fees, repair costs, and allocations to the maintenance reserve for communal property.
How does depreciation (AfA) affect an inherited property?
As an heir, you assume the legal position of the deceased and continue their depreciation ('footstep theory'). If the deceased owned a building (constructed after 1924), you can continue to deduct 2% of the original building's value annually as advertising expenses from the rental income.
Do I need to consider rent control for an inherited apartment?
Yes, if the flat is located in an area with a tight housing market, you must adhere to the rent control when re-letting. The rent may then be at most 10% above the local comparative rent, unless an exception applies (e.g. higher previous rent).
What is the difference between gross and net rental yield?
The gross rental yield (annual net rent / purchase price) is a quick but imprecise indicator. The net rental yield is more meaningful as it subtracts all non-allocable operating costs from the revenue, thus showing the actual profitability before taxes.
Is renting out an inherited apartment always worthwhile?
Not necessarily. It depends on the net return, the condition of the property, the management effort, and alternative investment opportunities. A low return of less than 2.5% with a high backlog of renovations might make selling more sensible.
