Ehegattenschaukel in real estate explained for investors and expats

As a financial expert focused on the German property market, I am often asked how the Ehegattenschaukel works in practice. When structured as a genuine sale at market terms between spouses, this approach can refresh the depreciation base for the buying spouse, improve after tax cash flow and still keep the asset within the family. When done carelessly, it can fail to deliver benefits or trigger avoidable questions. This guide gives you a practical and enjoyable overview you can put to work immediately.

Table of contents

• What the Ehegattenschaukel is and why investors care
• How the Ehegattenschaukel works step by step
• Key benefits for tax depreciation and cash flow
• Requirements for valuation documentation and financing
• Typical costs and who pays for what
• Worked example and comparison table
• Risks mistakes and red flags the tax office notices
• Notes for expats and non residents
• Alternatives and when not to use this approach
• Frequently asked questions
• Closing thoughts and next steps

What the Ehegattenschaukel is and why investors care

The Ehegattenschaukel is a sale of a rented property from one spouse to the other at a price and on conditions that reflect a normal market transaction. Because the buyer spouse acquires a new purchase price for the building portion, annual depreciation can be calculated from this refreshed base instead of an older and lower base. For landlords who hold the property in private assets this can reduce taxable rental income and therefore improve after tax cash flow.

When the selling spouse has held the property in private assets for a sufficiently long period, the sale can be neutral for income tax purposes. The key value driver is the depreciation reset on the buyer side. It is not a way to ignore basic tax rules. Treat it as a professional sale that just happens to be within the family.

How the Ehegattenschaukel works step by step

Overview of the process

The strongest results come from transactions that look like textbook examples. Think of the following sequence as a proven checklist.

1. Independent valuation with a documented split between land and building. The building share drives depreciation for the buyer spouse.
2. Financing review for the buyer spouse. Lenders look at income, rent roll, purchase price and overall stability.
3. Notarial purchase agreement that sets price, payment terms, rental situation and any encumbrances.
4. Clean payment flow through regular banking channels. Keep confirmations and statements.
5. Registration in the land register. The buyer spouse becomes the legal owner and notifies tenants and service providers.
6. Tax documentation. The buyer spouse prepares the new depreciation schedule. The seller spouse reports the sale and updates financing where required.

Why valuation and documentation are essential

Market value supported by facts, a clear split between land and building, bankable terms and a complete paper trail form the core of a robust file. When these elements are in place the reporting becomes routine and the benefits are easier to sustain.

Key benefits for tax depreciation and cash flow

Depreciation on a refreshed building base

In Germany depreciation is calculated on the building portion of the purchase price. This is why the allocation between land and building matters so much. After the transfer the buyer spouse calculates annual depreciation on the new building value. A higher building base usually produces a larger annual deduction and therefore lowers taxable rental income. This is a mechanical effect that depends on the verified purchase price and the documented building share.

Cash flow improvement and reinvestment options

Lower taxable income often translates into more free cash after tax. In practice investors use this room to fund energy upgrades, improve interiors or accelerate principal repayments. I have seen couples use the better numbers to qualify for an additional mortgage for the next investment. If you aim to scale a portfolio, the improved post tax cash flow can be a practical enabler.

Family control and portfolio strategy

The property remains within the family while ownership and cash flow can be positioned where they fit best. Some couples place the property with the spouse who has more tax capacity from employment income. Others shift rental income to the spouse who plans a temporary break from work. The approach offers flexibility without sacrificing long term control.

Requirements for valuation documentation and financing

Market price and clean money trail

The sale should be at a price that can be defended as a market value. A valuation report or a broker opinion with comparable transactions supports this. Payment should follow the contract precisely. If you use a seller loan inside the family, write commercial terms and follow them. Bank statements that show the transfers are part of the essential file.

Holding period in private assets

The selling spouse should verify that the property has been held in private assets for a long enough period that the sale is neutral for income tax. The well known ten year rule for private disposals is a frequent reference point. Confirm your dates and usage history before you proceed. The buyer spouse focuses on the new purchase price allocation and the depreciation schedule.

Allocation between land and building and useful life

Depreciation depends on the building value and the applicable useful life under current rules. The split between land and building must be plausible and should be documented clearly. A transparent schedule avoids follow up questions and supports your tax filing for rental income.

Financing that stands on its own

Lenders will review the buyer spouse as they would any other borrower. Expect to provide income statements, rent statements, valuation, photos and insurance details. To test scenarios in advance you can model interest rates, repayment speeds and yields before you speak with banks. If you want a quick way to check numbers you can use our Property Investment Calculator. Open Property Investment Calculator

Typical costs and who pays for what

Plan for notary fees, land registry costs, valuation fees and financing related costs such as bank fees and interest during processing. In many spouse transfers there can be relief from property transfer tax but this must be checked for the exact pathway and timing of the transaction. Contract clauses can allocate costs between parties. From a household view the family ultimately covers the total, so build a complete cash plan that includes taxes and fees.

Worked example and comparison table

The following numbers are illustrative to show the mechanism without unnecessary detail. Consider a rented apartment with a market value of 400000. A valuation attributes 30 percent to land and 70 percent to the building. The property has been held in private assets by the selling spouse for a sufficiently long period. The buyer spouse finances 80 percent with a regular mortgage.

• Purchase price paid by the buyer spouse 400000
• Building share 70 percent equals 280000
• Annual depreciation is applied to the new building value according to current rules
• Rental income and operating costs continue as before but now belong to the buyer spouse

Two practical observations from real cases. The land share matters. Aggressive assumptions can undermine the position later. Use a method that you can defend or rely on a professional valuation. Tenants usually only notice a change of owner details on service invoices. Clear communication keeps the transition smooth.

Risks mistakes and red flags the tax office notices

Uncommercial terms or paper sales

A price far below market without evidence or a contract that is never followed by real payments can invite scrutiny. Family members can agree friendly terms, yet they should still look reasonable in a market context and they should be executed exactly as written.

Weak documentation and missing payment trail

A robust file contains a valuation, a signed contract, bank confirmations and clear transfers. Gaps create questions. In property transactions careful documentation is the safest path.

Relationship risks and asset protection

Consider how you manage equity and repayment if life changes. Title sits with the buyer spouse after the sale. Planning for exit scenarios is not pessimistic. It is professional risk management.

Notes for expats and non residents

For international couples the legal steps are those of a normal domestic property sale with a notary and land registry. What changes is the personal tax position in the country of residence and the interaction between two tax systems. A practical approach is to model rental income with and without the transfer and then consider personal circumstances abroad. If you are searching for opportunities from outside Germany you can shortlist assets with our Real Estate Search Engine. Open Real Estate Search Engine

Alternatives and when not to use this approach

Gift or free transfer inside the family

A free transfer does not create a new purchase price and generally carries over the existing depreciation base. If your goal is a higher depreciation for the future owner, a gift will not achieve that result.

Waiting for stronger fundamentals

If valuation evidence is weak, financing costs are unusually high for the buyer spouse or the rental situation is unstable, it can be better to improve fundamentals before you proceed. You can also apply the approach to a single unit rather than to an entire portfolio.

Portfolio restructuring without a sale

Some couples reach similar cash flow outcomes by refinancing, by targeted renovations that raise rents within the legal framework or by changing the repayment profile of existing loans. A spouse to spouse sale is powerful but not the only tool that exists for portfolio optimisation.

Frequently asked questions

Is the Ehegattenschaukel legal

Yes. It is a normal property sale between spouses conducted at market terms and properly documented. The buyer spouse becomes the owner and claims depreciation on the building portion of the purchase price.

Does property transfer tax apply between spouses

In many spouse transactions there can be relief under German rules, but the outcome depends on the exact pathway and timing. Verify this point with your notary and tax adviser based on the specific facts of your case before you sign.

When is the sale by the seller spouse neutral for income tax

For private assets a sale can be tax free after a sufficiently long holding period. The widely known ten year rule for private disposals is a common reference point. Check your dates and usage periods carefully.

What documents are needed

Valuation with a land and building split, financing confirmation for the buyer spouse, notarial purchase agreement, proof of payment, land register documentation and a depreciation schedule for the buyer spouse. Keep tenant notifications on file as well.

Can we structure a seller loan between spouses

Yes. Many couples use a seller loan. Put a commercial interest rate and a clear repayment plan in writing and follow both exactly. The payment trail should match the contract.

Does it work for furnished rentals or mixed use buildings

The core mechanism is the same. Mixed use and furnished rentals add layers to valuation and tax classification. A careful allocation and clear documentation are the keys.

How often can we use the Ehegattenschaukel

There is no fixed limit. Each sale must stand on its own commercial merits and make sense after all costs. In practice couples use it selectively for properties where the numbers justify the effort.

Closing thoughts and next steps

The Ehegattenschaukel is a professional method to refresh the depreciation base while keeping the asset in the family. If you set a defensible market price, document the land and building split, keep a clean payment trail and plan financing properly, the approach can deliver a tangible improvement in after tax cash flow.

If you want to test numbers before speaking with lenders, run a quick model in our calculator. If you are still scouting for suitable assets, shortlist options and check yield math in one place using our search tool. If you would like a personal review of your case, share your numbers and goals so we can outline a plan that fits. Open Property Investment Calculator and Open Real Estate Search Engine. For a tailored consultation you can reach us here. Contact us