Vacancy

Vacant rental refers to a situation in which a property or individual units are intended for rental but do not currently have tenants-the units are vacant. Unlike units that are temporarily unoccupied between two tenancies (turnover vacancy), vacant rental often refers to a structural vacancy where there is insufficient demand or the unit cannot be rented for other reasons. The term is also colloquially used to describe the active leasing of previously vacant units.

Causes of Vacancy

Vacancy arises for various reasons:

• Structural vacancy: In shrinking regions, supply consistently exceeds demand (e.g., in rural parts of eastern Germany or peripheral Franconian regions)
• Quality vacancy: Properties in poor condition or with outdated amenities fail to attract tenants despite sufficient demand in the overall market
• Owner decision: Deliberate non-marketing in anticipation of higher rents or a future sale (speculative vacancy)
• Renovation vacancy: The apartment is temporarily uninhabitable due to ongoing modernization work
• Legal obstacles: Disputes with former tenants, pending insolvency proceedings, unresolved ownership issues

Economic consequences for landlords

Every month of vacancy incurs costs without generating income:

• Ongoing property expenses (property tax, insurance, condominium fees) continue to accrue
• No rental income to cover interest and principal payments on the financing
• Potential neglect (lack of heating, vandalism damage) increases maintenance costs
• Heated vacant apartments incur heating costs; if not heated, there is a risk of frost damage to water pipes

In the income approach valuation according to ImmoWertV, a market-standard risk of rental loss (1.5-5% of gross income) is applied as management costs-thus accounting for vacancy risk in the calculation. In the event of prolonged vacancy, the tax office may question the intent to generate income, which leads to the loss of tax deductibility for business expenses.

Measures to Reduce Vacancy

Owners can actively combat vacancy:

• Rent adjustment: Adjust the asking price to market rent and the property’s condition
• Renovation: Modernizing the kitchen, bathroom, and floors significantly increases rentability
• Professional marketing: Appealing photos, comprehensive property descriptions, listings on relevant portals (Immobilienscout24, Immowelt, classified ads)
• Temporary subletting: Short-term furnishing and subletting bridges vacancy periods and ensures ongoing income
• Partnerships: Collaborate with social housing agencies, student housing organizations, or companies to provide company housing

Speculative Vacancies and Municipal Responses

In cities with tight housing markets, some municipalities have enacted vacancy ordinances that require owners to report and rent out vacant apartments. In Bavaria, however, the legal basis for such ordinances is limited. Nevertheless, owners in Nuremberg and Erlangen should be aware that speculative vacancy-the deliberate holding of apartments vacant-is increasingly viewed critically from a political perspective. In some federal states, mandatory occupancy orders are already being discussed. As a responsible owner, we recommend keeping vacancies as short as possible.

Tax Treatment of Vacancies

The tax deductibility of income-related expenses during a vacancy depends crucially on the intent to rent. Anyone who actively markets an apartment-through listings, viewings, or real estate agent commissions-can claim interest, depreciation, and other management costs for tax purposes even during the vacancy. If there is no demonstrable intention to rent, the tax office may disallow all expenses for the vacancy period. Particularly risky: years of vacancy without any marketing efforts. In such cases, owners should definitely seek tax advice.

Practical Tip for Owners in Nuremberg and Franconia

In Nuremberg and the entire metropolitan region, vacancies are currently the exception rather than the rule-demand for housing exceeds supply. Nevertheless, there are outliers: properties in poor condition, in unfavorable locations, or with years of renovation backlog are difficult to rent out here as well. We recommend that owners with vacancies lasting more than three months have a professional appraisal of the property and a market analysis of current rental rates conducted.

Especially for apartments in older existing buildings in neighborhoods such as Langwasser, Schoppershof, or Röthenbach an der Pegnitz, targeted renovations (new floors, freshly painted walls, modern bathroom) can reduce the time it takes to find a tenant from several months to just a few weeks. The renovation costs pay for themselves through faster re-leasing and often also through a higher achievable rent. We’re happy to help you assess the potential of a vacant apartment and prioritize the right steps.

Frequently Asked Questions

Do I have to report vacancies to the tax office?

Yes, indirectly. Vacancy periods cannot be claimed as income-related expenses if there is no serious intention to rent the property. The tax office may classify losses from long-term vacancy without rental efforts as tax-irrelevant (lack of intent to generate income). Anyone wishing to deduct income-related expenses despite vacancy must provide complete documentation of active rental efforts.

Can I have my property tax reduced in the event of vacancy?

In Bavaria, pursuant to Art. 9(1) GrStG (in conjunction with § 33 GrStG), it is possible to apply for a property tax waiver in cases of permanent structural vacancy and associated loss of rent. The prerequisite is that the vacancy is not the landlord’s fault and that the landlord has actively attempted to rent the property. The application must be submitted to the competent tax office within a specified timeframe.

What is the difference between vacancy and turnover vacancy?

Turnover vacancy refers to the normal, short-term vacancy between two tenancies (usually one to three months). It is standard in the market and is factored into the risk of lost rent. Structural vacancy, on the other hand, is a persistent problem that poses a long-term threat to the property’s profitability and carries specific tax risks.

When does vacancy become a tax issue?

There is no legally defined threshold. As a rule of thumb: If an apartment has been vacant for more than a year and there is no evidence of active efforts to rent it out, the tax office may deny the landlord’s intent to rent. In individual cases, tax courts have also classified shorter periods of vacancy as problematic if no marketing efforts were evident. We recommend immediately beginning marketing efforts for every vacancy and documenting all steps.

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