We would like to purchase an apartment for own living in Berlin. I would appreciate if someone can explain tax benefits of executing such a purchase using a long-term bank loan.

AFAIK there's no tax benefits if you are buying an apartment for own living, tax benefits can be obtained if the apartment is put on rental so you can declare a Verlust auf Vermietung und Verpachtung, something that we did last year.

D.

Isn't the Rental Income taxable ? Can you please explain how Verlust auf Vermietung und Verpachtung works ?

Thanks a lot

The only benefit, is that profits on a sale after about 3 years of living in the property are tax free. If you rent it out, it will be 10 years after you can sell it tax free, you can offset loan interest against rental payments and certain expeditures. But you need to be aware of the particulars of renting a property in Germany, and really vet the tennant.

Where in berlin are you looking for, btw?

Thanks Aalvarez. We are seeking an apartment in Berlin-Steglitz are for our own living. I have learnt from the Agent that it would be possible to apply for annual tax deduction on 2% of the total cost over the next 50 years (linear abschreiben). What I don't know, it works if we use the apartment ourself or rented out.

@roundtheclock

yes you can, e.g. when you buy a flat or house in sanierungsgebiet...there are some more §s under what one could save taxes...
also check http://www.handelsblatt.com/finanzen/ratgeber/immobilien/wie-eigenheimbesitzer-steuern-sparen-koennen/4536866.html
and search more...