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Rent or sell, which is more worthwhile?
Are you facing the decision of whether to sell or rent out your property? This choice has significant financial implications and should not be made on a whim. We will show you how to determine the most profitable option for your property based on key figures.
With access to Google, BORIS, and Deep Research.
The decision between renting out and selling should be based on an analysis of rental yield (on average 3.83% in major cities), the 10-year speculation period for tax-free sales, and personal management effort.
The costs of renting (approximately 20-35% of the net rent for maintenance and administration) must be weighed against the one-off sales costs (around 5-9% for the agent and notary).
The current market forecast for 2025 indicates a slight price increase of 1-3%, which could make sales attractive, while rising rents and tax benefits speak in favor of letting.
A property is more than just a home; it is a significant asset. Whether through inheritance, relocation, or as a pure investment – every owner eventually faces the question: Is it more worthwhile to rent or sell? There is no blanket answer, as the right strategy depends on market data, tax deadlines, and your personal life planning. This article provides you with the crucial facts and benchmarks. We analyse the costs, returns, and risks of both options so that you can make an informed, data-driven decision that optimally supports your financial goals.
The decision between renting and selling depends on three key areas. Your financial goals define whether you are seeking short-term liquidity or long-term income. The current market situation, with rental yields averaging 3.83% in major German cities, affects profitability. Your personal effort in managing a rental property is a factor that should not be underestimated.
Selling a house generates immediate liquidity for new investments or personal projects. In contrast, renting offers a steady, passive income stream averaging €7.28 per square metre in cold rent across the country. The gross rental yield is a key metric for assessing profitability. It's calculated by dividing the annual cold rent by the purchase price and multiplying by 100. In cities like Chemnitz, returns of over 5.5% can be achieved, whereas in expensive metropolises, they often fall below 3%. A yield of at least 2 percent is considered attractive compared to other types of investment. For precise calculation, you should use our rental yield calculator. These figures form the basis for deciding which route is more profitable for you.
The decision heavily depends on your individual financial situation. If you need capital immediately, selling is often the better choice. If you're seeking long-term retirement planning, renting, despite the effort involved, may be the right strategy. The value development of your property also plays a crucial role in this consideration.
Property Prices 2025: A Slight Upward Trend
After a period of stagnation, property prices are once again showing a slight upward trend. Experts forecast a price increase between 1 and 3 percent for 2025, particularly for energy-efficient properties in urban areas. The price index for existing properties recently rose by 0.63% within a month. This moderate increase signals a stable market, but no more price explosions. The energy condition has become a crucial price factor; properties requiring significant renovation might see stagnant or even reduced prices. Therefore, the question of the best time to sell highly depends on the quality of the property.
Long-term Value Appreciation as a Factor
When renting, focus on the long-term value appreciation of your property. Historically, properties have gained in value, even though there are short-term fluctuations. A leased property can serve as a hedge against inflation, as rents tend to rise with the general rate of inflation. This secures the real value of your income over the years. A well-considered strategy for long-term value appreciation is therefore essential. Analyzing costs and risks is the next logical step in your decision-making process.
Hidden Costs of Renting
Renting incurs ongoing costs that are often underestimated. These non-recoverable management costs can account for 20 to 35 percent of the net cold rent. An overview of the main items:
Maintenance Costs: For properties older than 32 years, you should set aside approximately 11.50 euros per square meter annually.
Administrative Costs: An external property management service costs between 200 and 500 euros per unit per year, depending on size.
Rent Default Risk: You bear the risk of payment defaults or vacancies between tenancies as the landlord.
Legal Disputes: Conflicts with tenants can be expensive and often require legal support.
These factors significantly reduce your net yield and must be considered when determining how to set the rental price.
Costs and Obligations in Selling
Selling is a one-time process, but it also involves costs. Plan for the following expenses:
Brokerage Commission: Typically, buyer and seller share the costs, with up to 3.57% of the sale price falling to you.
Notary and Land Registry Costs: These amount to about 1.5 to 2.0% of the documented purchase price.
Energy Certificate: A valid energy certificate is legally required for the sale and must be commissioned by you.
Valuation: A professional valuation of the house provides a solid negotiation base and maximises your return.
The biggest financial pitfall when selling, however, can be the speculation tax. This leads directly to the tax consideration, which often makes the decisive impact.
Tax treatment is often the decisive factor when determining whether renting or selling is more profitable. The legislature sets clear deadlines and rules here. A misjudgment can cost you tens of thousands of euros.
If you sell a property that you have not lived in yourself within ten years of purchase, the so-called speculation tax is levied on the profit. The amount depends on your personal income tax rate and can be up to 45%. After the ten-year period, the profit from the sale is completely tax-free. There is an exception for personal use: if you have lived in the property during the year of sale and the two preceding years, the tax is also waived. This period is therefore particularly critical when selling a rented house.
When renting out, you must pay tax on rental income. However, you can deduct a variety of costs as advertising expenses, thereby reducing your tax burden. These include interest on financing, maintenance costs, and linear depreciation (AfA) of 2% per annum on the building value. These tax advantages of renting can significantly improve the after-tax return. Your personal situation and financial horizon are thus the final pieces of the decision puzzle.
Apart from all the figures, your personal capacities and life planning are crucial. Renting out a property is not purely passive income. It requires active management, from finding tenants to settling ancillary costs to organizing repairs. This time commitment is often underestimated and can quickly amount to several hours per month. If you have neither the time nor the patience for tenant communication, selling is the less stressful solution.
Your risk appetite also plays a significant role. As a landlord, you bear the risk of rental defaults, vandalism, or expensive, unforeseen repairs. Selling, on the other hand, offers a clear closure and financial planning security. Carefully weigh these financial decisions. If you're uncertain, a neutral, data-driven analysis can help. The ImmoGPT chat by Auctoa can answer initial questions and provide a preliminary assessment around the clock.
The question "Rent or sell?" can only be answered individually. Selling provides quick liquidity and a clear conclusion but is only tax-efficient after the 10-year period. Renting promises long-term income and value appreciation but requires constant management effort and carries financial risks. Your best strategy comes from the intersection of market data, tax conditions, and your personal life situation. Use tools like the comparison calculator for sale or rental to objectively assess your options. An informed decision secures your wealth for the future.
Statistisches Bundesamt provides comprehensive information on construction prices and the property price index in Germany.
Statistisches Bundesamt provides detailed tables on house and land prices.
Statistisches Bundesamt supplies basic data on the consumer price index.
Deutsche Bundesbank presents its indicator system for the housing market.
Deutsche Bundesbank offers an article on the development of residential property prices and rental pressure in 2023.
ifo Institut provides a press release about new housing construction in Europe.
Institut der deutschen Wirtschaft Köln (IW Köln) offers a dedicated page on real estate topics.
IW Köln presents a study on the housing market in 2025 and its development.
BVR publishes a study forecasting future property price trends.
Is it more worthwhile to sell or rent an inherited house?
This depends on the estate community and the condition of the house. Selling offers a quick and clear division of the proceeds. Renting can secure long-term income but requires consensus and commitment to management. It is also crucial when the testator acquired the property, as this period is adopted for the speculation tax.
How does the condition of the property affect the decision?
A property in need of renovation requires high initial investments for renting. These costs can make selling more attractive, as the buyer would take on the renovation. In contrast, a property in top condition can be rented out at a good price more easily and generates immediate income.
Can I change the decision later?
Yes, but with limitations. If you opt for renting, you can still choose to sell later. Be aware that when selling to the tenant, their right of first refusal may apply, and notice periods for personal use can be very long. Selling is final.
What role does the location of the property play?
Location is crucial. In growing regions with high demand, both good rental returns and significant value appreciation are likely, which makes renting attractive. In structurally weak regions with vacancies, a quick sale can be the better option to minimise risks.
What is the three-property limit?
If you buy and sell more than three properties within five years, the tax office may classify you as a commercial property dealer. Then, not only income tax but also trade tax is due on the profits. This is essential to consider when planning your property strategy.
How can Auctoa assist me with the decision?
Auctoa offers a rapid, AI-based, and neutral property valuation. We provide you with the current market value of your property and the potentially achievable rent. This data-driven foundation enables you to objectively compare the financial attractiveness of selling and renting, helping you make the most profitable decision.
