Let or sell? A decision aid for Dresden owners

I'm often asked the question "let or sell?" by owners who have inherited a flat or, after years of letting, are wondering whether the time for a sale has come. There's no universal answer — but there is a clear method for making the right decision for your situation.

What it's really about

This decision is not a pure question of return. It is a combination of financial analysis, tax planning and personal life planning. Anyone who only calculates the return forgets the administrative effort. Anyone who only sees the tax advantage forgets the liquidity that a sale releases. And anyone who only looks at the current market situation overlooks their own circumstances.

My advice: start with the figures — but don't let the figures decide alone.

The finances: rental yield vs. sale proceeds

Let's look at a concrete example from the Dresden market:

Starting point: A 70 m² flat in Pieschen, built in the 1970s, solidly renovated, current market value around 200,000 €. Current rent: 700 € cold (10 €/m²).

Gross yield:

• Annual cold rent: 700 € × 12 = 8,400 €
• Gross yield: 8,400 € / 200,000 € = 4.2%

That sounds solid. But now come the deductions:

• Non-apportionable administrative costs (service-charge share, owners'-association reserves): around 150 €/month → 1,800 €/year
• Maintenance reserve (your own calculation): around 80 €/month → 960 €/year
• Rent loss (1 month every 5 years): around 140 €/year on average

Remaining net income before tax: around 5,500 €/year → net yield before tax: 2.75%

After income tax (assumed tax rate 35%, less the depreciation effect) a realistic 1.8–2.2% net yield after tax remains.

For comparison: German federal bonds with a 10-year term yield around 2.6% in 2026. That's less effort than managing a rental flat.

The free rental yield calculator helps you carry out this calculation for your specific property.

Tax differences

Tax is often the decisive factor in this decision — and is most frequently misjudged.

Letting: depreciation as a tax advantage

With let properties you can write down the building (depreciation = write-down for wear and tear). The standard rate is 2% of the building value per year. With a building share of 150,000 € (the land share is not depreciated) that's a 3,000 € annual tax deduction. At a tax rate of 40% that saves 1,200 € in tax per year.

On top of that come deductible costs: interest, service-charge shares, administration, repairs. Effectively, let properties are more tax-attractive than many people think.

Selling: bear the speculation tax in mind

If you sell a let property within 10 years of the purchase, the profit is taxable — at your personal income tax rate. On a profit of 60,000 € and a tax rate of 40% that's 24,000 € in tax.

You should use the speculation tax calculator if your property has not yet been in your possession for 10 years. The result can considerably change the decision calculation.

Special case of owner-occupation: If you have lived in the flat yourself — at least in the year of sale and the two years before — the speculation tax falls away entirely. That is a considerable advantage.

Income tax on rental income: Rental income is fully taxable as income from letting and leasing. Anyone who already has a high income taxes their rental income at the top tax rate. That further reduces the net yield.

Your personal situation

Figures alone don't answer the question. The following factors often speak against letting, even when the return looks attractive on paper:

Administrative effort: A rental flat means: finding tenants, concluding tenancy agreements, drawing up service-charge statements, coordinating tradespeople, enforcing rent increases, acting in the event of a loss. That's work — underestimated work. On average it amounts to 5–10 hours per quarter, even without problems.

Tenancy-law risk: In Germany, the tenant has considerable protections. A termination for the landlord's own use often takes 6–9 months. With payment arrears, a further 6–12 months are added in court. In my work I've seen how a single problem tenant kept a landlord occupied for over two years.

Loss of flexibility: The property is tied up. If you need the capital — for another investment, for retirement, for a move — the liquidation takes months. The proceeds of a well-marketed property are available after 3–4 months.

Emotional attachment: Especially with inherited properties or the former family home, this factor carries weight. The rational decision can be overlaid by emotional attachment. That's human — but it should be consciously reflected on.

The Dresden market situation 2026

In 2026, Dresden is a functioning rental market — but no longer an excess-return market.

Rents by location:

• Inner Neustadt, Outer Neustadt: 11–14 €/m²
• Blasewitz, Striesen, Loschwitz: 10–13 €/m²
• Pieschen, Löbtau, Plauen: 8–11 €/m²
• Gorbitz, Prohlis, Cotta: 6.50–8.50 €/m²

Purchase prices for condominiums in 2026 lie between 2,200 €/m² (peripheral locations, unrenovated) and 4,500 €/m² (top locations, as new), depending on location and condition.

Gross yields therefore move between 3.5% (top locations) and 5.5% (peripheral locations). The higher yield in poorer locations doesn't come without reason — vacancy risk, tenant creditworthiness, a need for renovation.

For a precise assessment of the current market value of your property, use the free property value calculator.

When letting makes sense

• The gross yield is above 4.5% and the location is in stable demand
• You are still within the 10-year speculation period and a sale would trigger high tax
• You don't need the capital and have no other attractive use for it
• You have experience with letting or a reliable property manager
• The property is in good condition — no looming renovation backlog
• You expect further appreciation at the specific location
• The depreciation noticeably lowers your tax burden (on a high income)

When selling makes sense

• You have a more sensible use for the capital elsewhere (debt reduction, a more profitable investment)
• The 10-year speculation period has elapsed — a tax-free sale is possible
• The need for renovation exceeds your reserves or willingness
• Your personal tax rate makes rental income unattractive (top tax rate)
• The return is below 3.5% net before tax
• You want to regain flexibility — spatial or financial
• The property is in a location with weaker rental demand
• The administrative effort and emotional burden exceed the financial benefit

Note: if you would like to sell a let property, there are some particularities to bear in mind regarding the pool of buyers and the price-setting.

My advice

In my experience the decision is often clearer than it first appears — once you calculate the figures honestly. Most owners underestimate the ongoing administrative effort and overestimate the net yield.

My rule of thumb: if the net yield after all costs and taxes is below 2.5%, the capital is better placed in a sale. If the return is above 3.5%, continued letting is worth it — provided the location and tenant structure are stable.

What I concretely recommend to owners: calculate the depreciation effects, work out the speculation tax, and set the net yield in relation to the current market situation. Only then decide. With the right analysis, this decision no longer costs uncertainty — only a little time.

Our conclusion

The figures of the Dresden market in 2026 are clear: for a typical condominium in a good to mid-range location, after administrative costs, the maintenance reserve and tax, a net yield of 1.8 to 2.2 percent results — less than a ten-year federal bond, with considerably higher effort and tied-up capital.

For owners who have no strategic interest in a long-term property portfolio — that is, who are not professional landlords and don't have to hold the property for tax reasons — selling is in most cases the economically more sensible decision. The sale proceeds are available as liquidity, the administrative effort falls away, and the tenancy-law risk is eliminated.

That applies all the more if the 10-year speculation period has already elapsed. Then a profit from the sale is tax-free — an advantage that rental income can never offer. Anyone who continues letting in this situation is putting off the sale without achieving a tax advantage.

Do you have questions about your specific situation? Talk to me directly — without sales pressure, without standard answers.