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OPERATING COSTS

Operating costs refer to expenditure incurred throughout ownership of the property.

Service Charge/Running Costs ( Hausgeld ) If your property is an apartment, or it shares communal facilities with other properties, a service charge will be payable. The service charge is an annual cost that pays for the upkeep of the building, heating, water, maintenance of any communal facilities and building insurance.

The costs can be transferred to a long-term tenant as part of the rental figures.

The service charge is payable monthly and reconciled at the end of the year. The Home Owners Association ( Wohnungseigentümergemeinschaft ) (WEG) along with the building management company will reconcile all the payments and either the owner will have to subsidise the WEG or they will be issued a refund for overpayment. If a property owner has included the service charge payments in the monthly rent, then any overpayment must be passed onto the tenant.

Sinking Fund A CapEx reserve is paid by the property owners as a sinking fund for the building. This cost is set annually by the WEG. The sinking fund costs cannot be included in the monthly rental paid by the tenant.

Ground Tax ( Grundsteuer ) The annual real property tax burden presently ranges from about 0.5% to 2% of the specific tax value. This value is generally not more than about 25% of its fair market value. Real property tax is a deductible expense for the taxation of income derived from the use of that real property.

Repairs and Maintenance Repairs and maintenance within a property are the responsibility of the owner. However, tenants may be liable for damage caused, barring normal wear and tear. Between tenants, the owner will need to ensure that the property is in a good condition for it to be re-let, which will include repairs and regular redecoration.

Tenant Management Fee ( Sondereigentumsverwalter ) These fees are charged by a lettings and management agency for their services, including locating a tenant and contract renewal. These fees are paid by the property owner and cannot be included in the monthly rent paid by the tenant.

Building Management Fee These fees are charged by a lettings and management agency to represent you for any matters with the WEG.