When it comes to German real estate investing, one of the most underrated tax tricks has a name that sounds more like a dance move than a financial strategy: the Ehegattenschaukel—or, in English, the spousal swing.
It’s legal. It’s boring. And it’s brilliant.
What Is the Spousal Swing?
The spousal swing allows married couples to transfer a property between each other after 10 years without paying Grunderwerbsteuer (property transfer tax). But the real magic lies in the fresh start for depreciation (AfA – Absetzung für Abnutzung).
Imagine this: Spouse A buys an investment property for €350,000, of which €280,000 counts as the building value (land excluded). For 10 years, depreciation is based on that €280,000. Then, after the 10-year holding period, Spouse B “buys” the property for €600,000. Now the building value is €480,000, and depreciation resets at that higher number.
Result? Instead of €5,600 per year, the new depreciation is €9,600 annually. Over the next 10 years, that’s an additional €40,000 in deductions—all without spending a single euro on renovations.
Why Does This Work?
Two reasons:
- Tax Reset on Depreciation – When ownership changes between spouses after 10 years, the depreciation basis adjusts to the new purchase price. This essentially doubles your tax shield without touching the property itself.
- Interest Deductibility – If Spouse B finances the “purchase” with a bank loan, the interest payments are fully tax-deductible. Even better, both spouses can be listed on the mortgage without spoiling the setup.
The goal is simple: make it appear (on paper) that the property is producing lower profits—or even a loss—while the actual rental income remains the same. The difference is covered by the tax man.
A Worked Example
Let’s put numbers on the table:
- Initial Purchase (Spouse A): €350,000 → €280,000 building value
- Sale to Spouse B (after 10 years): €600,000 → €480,000 building value
Depreciation
- Before: 2% of €280,000 = €5,600/year → €56,000 over 10 years
- After: 2% of €480,000 = €9,600/year → €96,000 over 10 years
That’s €40,000 extra in deductions.
Interest Deduction
If Spouse B finances €600,000 with a loan at, say, 3.5%, that’s €21,000 in annual interest—also deductible. Multiply that over several years, and the Finanzamt starts footing a serious part of the bill.
Who Should Consider This?
- Investors with long-term rental properties
- Married couples who already own investment real estate
- Anyone looking to optimize tax burdens without risky loopholes
Important: This is not tax advice. Always consult with a Steuerberater before attempting your own spousal swing.
Conclusion: The Legal Way to “Reset” Your Real Estate Taxes
The spousal swing may not win you any points at a dance competition, but in the financial world, it’s a masterstroke. By using The Spousal Swing in German Real Estate, couples can legally restart depreciation, deduct interest, and avoid property transfer tax. In short: the rent stays the same, but the taxman happily pays more of your costs.
It’s strategies like these that make German real estate investing so fascinating. And if you’d like to explore more clever tactics for building your property portfolio, check out our other Immojourney insights.
