Second Home Tax

Second Home Tax is a local excise tax that municipalities are authorized to levy on the ownership of a second home pursuant to Article 105(2a) of the German Basic Law (GG) and state-level enabling legislation. It becomes due when a person maintains a residence in addition to their primary residence that is not used to generate income (i.e., is not rented out). The tax is triggered by the Residents’ Registration Office-either through the registration of a secondary residence or a determination by the authorities-and can significantly increase the running costs of a vacation home, a student apartment, or a commuter residence.

Who is subject to the second-home tax?

Anyone who maintains a residence within the municipal area as a secondary residence without registering it as their primary residence and without renting it out is subject to the tax. This includes: vacation home owners, people returning to work with a second home outside the area, students with their own apartment and whose primary residence is with their parents, as well as owners of weekend homes. On the other hand, those who are not subject to the tax include primary residence owners, occupants of company-provided housing, and individuals who can demonstrate that they maintain a second home for professional reasons and can claim this for tax purposes.

In practice, the distinction is not always clear-cut: If someone works in Nuremberg during the week and travels to Bamberg to be with their family on the weekends-which is then the “true” primary residence? The Federal Administrative Court has ruled on this matter that the center of life is the decisive factor: Where does the person actually spend more time? Where are the children’s schools, clubs, and social ties? Registering a primary residence in one location does not automatically exempt one from tax liability in the other if the actual center of life is clearly located elsewhere.

Calculation and Amount of the Tax

The second-home tax is generally calculated as a percentage of the annual base rent or the local market rent-typically between 8% and 16%. Some municipalities charge a fixed annual amount. In Bavaria, tax rates vary by municipality; municipalities with a focus on tourism (e.g., the Bavarian Forest, Zugspitze region, Berchtesgadener Land) make particularly active use of this tax. As for Nuremberg itself, the city currently does not levy a second-home tax-however, surrounding municipalities can regulate this independently.

Specifically: A vacation home in a location with a second-home tax of 12%, which could be rented out for 800 euros per month (excluding utilities) at the local market rate (even if it is not rented out), results in an annual tax burden of 12% × 9,600 euros = 1,152 euros. Anyone who leaves the apartment vacant and generates no rental income therefore pays taxes without receiving anything in return-a strong incentive to rent it out or to re-register their primary residence.

Exemptions and Tax Deductibility

Exemptions are possible: Anyone who maintains a second home for professional reasons and cannot relocate their primary residence (e.g., because their spouse is tied to a job, the other partner owns a condominium, or children are enrolled in school) may be exempt from the tax under certain circumstances. The exemption must be applied for with the relevant authority and supported by documentation.

In addition, the second-home tax for work-related second homes is deductible as income-related expenses on the income tax return (category: maintaining two households). This at least partially offsets the double tax burden. The costs of maintaining two households-rent, travel expenses, and additional food expenses-can be claimed as income-related expenses up to a total of 1,000 euros per month.

Distinction from Income Tax for Rentals

Anyone who rents out their second home-either permanently or temporarily via platforms such as Airbnb or Booking.com-is generally not subject to the second-home tax, because the home is then used to generate income. However, rental income is subject to income tax (income from renting and leasing). Anyone who uses a vacation home partly for personal use and partly for rental must allocate the costs proportionally-and can only claim the portion used for rental as business expenses.

The exact line between private use and rental also has implications for sales tax: Anyone whose rental services generate annual revenue exceeding 25,000 euros and who is not operating as a small business owner is subject to sales tax. For vacation homes, the visitor’s tax (guest fee) is also relevant; this tax is collected from guests and must be remitted by the landlord.

Practical Tip for Owners in Nuremberg and Franconia

Anyone who owns a vacation rental or a second home that is not permanently rented out in the Nuremberg metropolitan region should check whether the respective municipality levies a second-home tax-and whether short-term rentals (e.g., via platforms like Airbnb) would exempt them from this tax liability. The interplay between second-home tax, sales tax, and income tax is complex and should be discussed with a tax advisor specializing in real estate.

Active second-home tax ordinances are particularly common in Franconian tourist communities-such as in Franconian Switzerland, around the Altmühl Valley, or in the Bavarian Forest near the Upper Palatinate. Anyone purchasing a vacation property there should factor these costs into their return on investment calculation. When assisting our clients in their search for vacation properties in Franconia, we also advise them on the tax framework in the respective municipality.

Frequently Asked Questions

Do I have to pay the second-home tax if I rent out the apartment?

No. If the property is permanently rented out and you do not personally derive any residential benefit from it, there is no tax liability-the second-home tax targets the private costs of ownership, not rental income. However, short-term private use between rental periods may result in tax liability; the exact criteria vary according to municipal regulations.

Can I deduct the second-home tax as an income-related expense?

Yes, if the second home is work-related (maintaining two households). The tax is then deductible as an income-related expense against income from employment. For private vacation homes with no intention of renting them out, no deduction is possible-the tax is then a genuine additional burden without tax compensation.

How is the assessed value of my second home determined?

Most municipalities use the annual base rent, which is replaced by the local comparative rent in cases of owner-occupancy or rent-free use. If no comparative rent can be determined, municipalities estimate the rental value based on their own criteria. An objection can be filed against an excessively high assessment-objections are often successful in cases of significant deviations from the actual market rent.

What happens if I don’t register my second home?

Failure to register a secondary residence despite actual use can be considered an administrative offense (violation of the registration requirement under the Federal Registration Act). Municipalities that actively enforce the law-especially in tourist hotspots-systematically check second homes for proper registration. Anyone caught will have to pay back taxes plus a fine. Voluntary registration and, if necessary, applying for an exemption is always the safer option.

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