Austria Rental Income Guide 2026

Deductible Expenses

Landlords can deduct a wide range of expenses: depreciation (AfA) of 1.5% per year of the building's acquisition/construction cost (excluding land value), financing costs (mortgage interest, loan fees), maintenance and repair costs (Instandhaltung), operating costs (Betriebskosten) paid by the landlord such as insurance, property tax (Grundsteuer), management fees (Verwaltungskosten), advertising for tenants, legal and notary costs, travel expenses for property management, and professional fees (architect, surveyor, lawyer). Larger renovation costs (Instandsetzung) can be depreciated over 15 years. The 1.5% AfA rate was temporarily increased to 2.5% for affordable housing construction (2024-2029) by the Wohnraum-Instandsetzungsgesetz.

Flat-Rate Options (Pauschalierung)

For smaller landlords, Austria offers a simplified flat-rate expense deduction instead of tracking actual costs. For residential properties built before 1945: 10.8% of gross rental income (up to a cap). For residential properties built after 1945: 9.72% of gross rental income (up to a cap). The flat rate covers all operating costs, maintenance, and minor repairs but does NOT cover depreciation (AfA), financing costs (mortgage interest), or major renovations. You can claim the flat-rate deduction plus separately claim AfA and interest expenses. The actual Pauschalierungsoption is available for properties that are not part of a business enterprise.

Special Rules and Restrictions

Losses from rental activities can create a negative income that reduces total taxable income (and thus tax liability). However, the Liebhaberei doctrine (hobby loss rule) applies: if the rental activity consistently generates losses with no prospect of profit (typically over 20+ years), the Finanzamt may classify it as Liebhaberei (hobby), disallowing loss deductions and taxing only the actual net profit. For residential rentals, a profit is assumed if the rental covers at least 50% of total costs (including depreciation) within the first 23 years. Commercial properties have a shorter profit-test period. Subletting (Untermiete) is also taxable — income minus deductible expenses (including the portion of your own rent allocated to the sublet space).

FAQs

Do I need to register as a landlord?

Yes. You must register your rental activity with the Finanzamt when you first rent out a property. You will receive a Steuernummer for rental income. Annual reporting is done via the Einkommensteuererklärung (Anlage V or Anlage V+Vermietung). If you rent multiple properties, you must track each property separately. Short-term rentals (Airbnb, Ferienwohnung) may require additional trade licenses and VAT registration if the service exceeds pure rental (e.g., breakfast, cleaning services).

Is rental income subject to VAT (USt)?

Long-term residential rental is generally exempt from VAT (Umsatzsteuer) under §6(1) Z16 UStG. This means you cannot charge VAT or deduct input VAT on expenses. Commercial rentals can opt for VAT (Option zur Steuerpflicht) under §6(2) UStG, allowing you to charge 20% VAT and recover input VAT on related expenses. Short-term tourist rentals (< 30 days) are subject to VAT at 10% (reduced rate) and must be reported in USt-Voranmeldung filings.

What is the Grundsteuer (property tax) rate?

Grundsteuer B (for developed properties) is calculated using the Einheitswert (unit value) multiplied by the Grundsteuermesszahl (0.5‰ for rental properties, 0.4‰ for owner-occupied), then multiplied by the Hebesatz (municipal multiplier, typically 300-700% depending on the municipality). The effective rate is approximately 0.15-0.35% of the property's Einheitswert per year. A reform (Grundsteuerreform) is being phased in with new valuation rules from 2025. The tax is fully deductible as a business expense for landlords.