Rental Income in Retirement: Health Insurance, Tax and Pensions

Andriy Bezborodko · 2026-10-14

You are retiring in three years and own a rental flat. Or you are considering buying one now to provide some extra income in later life. At some point, a question crops up that many people initially overlook: will your health insurer want a share?

The answer depends almost entirely on one thing: your insurance status as a pensioner. With compulsory cover, rental income remains contribution-free. As a voluntary member, you pay around a fifth of the surplus. There are also questions about tax, widow’s pensions and your partner’s family health insurance cover.

Here you will find all the rules for 2026 in tables, along with a calculation comparing both scenarios side by side, before and after tax.

01The key question: compulsory or voluntary insurance?

You qualify for the statutory health insurance scheme for pensioners if you had statutory insurance for at least 90% of the second half of your working life, either as a member or through family cover (§ 5 Abs. 1 Nr. 11 SGB V). Anyone who does not meet this requirement, for example after years with private insurance or in self-employment, becomes a voluntary member. Your health insurer’s notice issued in connection with your pension application states which category applies to you.

For many long-serving employees, this is good news. Anyone who qualifies for the KVdR can let property without their health insurer taking a share. For former self-employed people, partners of civil servants or those returning from private insurance, the calculation looks different.

02Voluntary insurance: how your insurer assesses the rent

Voluntary members pay contributions based on their overall financial capacity (§ 240 SGB V). Alongside their pension, this includes rental income, interest and dividends. The income tax assessment provides the basis for assessing rent.

What counts is not gross rent but the surplus: rental income minus allowable expenses. The Federal Social Court has confirmed that allowable expenses relating to letting may be deducted (BSG, Urteil vom 28.06.2022, B 12 KR 11/20 R). Interest, depreciation, management and maintenance costs therefore also reduce the contribution assessment base.

A rental loss, however, does not help. It is not offset against your pension or other income, and contributions on your pension remain payable. In this situation, a flat with high depreciation and interest costs that generates a loss for tax purposes simply attracts no additional contributions.

You bear the contributions on rent yourself; the pension insurance provider only subsidises contributions on the pension itself. If you have children and pay the average supplementary contribution, the total is 14.0 + 2.9 + 3.6 = 20.5%. No further contributions are due above the contribution assessment ceiling. Anyone whose pension and other income already exceed it pays no contributions on additional rent.

03Family cover: the trap for spouses

This is a situation many people only notice when a letter arrives from their insurer: if your spouse has family cover through you and is registered in the land register as an owner or joint owner, their rental income counts towards their total income. If this exceeds €565 a month (2026), family cover ends (§ 10 SGB V, § 16 SGB IV).

Here too, the relevant figure is the surplus for tax purposes, not gross rent. With joint ownership, it is divided according to ownership shares. If each partner owns half the flat and it generates an annual surplus of €9,000, each has €4,500, or €375 a month. That is below the limit. Add other income, however, and it could become tight.

If family cover ends, your partner must arrange their own insurance, usually on a voluntary basis. They then pay contributions on at least a statutory minimum assessment base, even if their income is lower. This can amount to several hundred euros a month. Before buying, therefore, clarify who will be entered in the land register and check with your health insurer.

04“Is that positive before or after tax?”

This is one of the most common questions in our consultations. In retirement, a third stage comes into play: after contributions. We work through an example for both insurance scenarios.

Gabriele is 67 and retired. Her taxable pension income, excluding rent, is €30,000 a year. She owns a mortgage-free rental flat with a monthly rent of €700 excluding service charges (Kaltmiete). Costs that cannot be passed on to the tenant (management, reserve contributions and repairs) amount to €600 a year, and depreciation is €3,600. The name is fictitious; the figures are an illustrative calculation, not a forecast.

Before tax, the flat generates €7,800 a year in both scenarios. With compulsory insurance, Gabriele keeps €6,586 of this, around €549 a month. As a voluntary member, she keeps €5,979, around €498 a month. The difference of €607 a year goes almost entirely to the health insurer, with a small part coming back through lower tax.

The calculation also shows why depreciation remains valuable in retirement. Without it, the surplus would be €7,800, and tax and contributions would be considerably higher. Our guide to property depreciation (AfA) explains how depreciation works. Calculate your own tax on rent using the rental income tax calculator.

How much of your rent remains after tax? Work through your own situation and, if you have voluntary insurance, deduct around 20% of the surplus for your health insurer.

05Does rental income reduce your pension?

This is usually the concern behind searches for “rental income pension insurance”. The answer differs depending on the type of pension.

Rental income does not trigger compulsory pension insurance, nor does it increase your pension. Letting property means managing your assets. Only commercial letting, such as a hotel-style operation, may be assessed differently.

For couples where one partner is considerably older or might die first, it is therefore worth reviewing the ownership arrangements. Who will inherit the flat, and which pension rules apply? This is not something a guide can resolve; it calls for advice from the pension insurance provider.

06Health levy on rent: the position in October 2026

In February 2026, the SPD party executive proposed a separate health levy on rental and investment income, without a contribution assessment ceiling. The parliamentary group’s health policy spokesperson cited a rate of 1.5% as an illustrative example. The CDU/CSU, the private health insurance sector and some statutory health insurers opposed it.

According to the reports available to us, the GKV-Beitragssatzstabilisierungsgesetz passed by the Bundestag in July 2026 does not contain such a levy. As at 14 October 2026, the proposal is therefore a political initiative, not law. We are monitoring the issue and will update this page as soon as a draft is available.

What would it mean in our example? At 1.5% of Gabriele’s surplus of €4,200, it would be €63 a year. Whether the levy would be calculated on the surplus or gross rent remains open. It should not be the deciding factor in a purchase decision, but it belongs on your planning checklist.

07Tax in retirement: what changes

Rental income is taxed at your personal tax rate, together with the taxable portion of your pension. For pensions starting in 2026, 84% is taxable, while the remainder is retained as a fixed tax-free allowance. Because pensioners usually have a lower income than during their working lives, the tax rate on rent is often lower too.

If you receive rental income, you will generally need to file a tax return, including Anlage V. Our guide to completing Anlage V shows you how to fill it in. The basics of taxation are covered in our guide to tax on rental income.

08Risks and limitations

A rental flat remains an investment with risks, even in retirement. Vacant periods, unpaid rent and major repairs hit pensioners harder because their regular income leaves less room for manoeuvre. Budget for a reserve of several months’ rent and the building’s service charges (Hausgeld).

Anyone buying at 60 or later usually borrows over a shorter term with higher repayments, because banks expect repayment by a certain age. This reduces cash flow in the early years. Read more in our guide to investment property from age 50.

The rules in this guide can change: contribution rates may change every year, while political decisions can alter the underlying principles. They also depend heavily on individual circumstances: insurance status, pension type and ownership arrangements. Have your health insurer confirm your status and Deutsche Rentenversicherung confirm your survivor’s pension provision.

09Further reading

• Investment property from age 50
• Property as retirement provision
• Tax on rental income
• Completing Anlage V
• Running costs of an owner-occupied or investment flat

10Sources

• §§ 5, 10, 226, 237, 240 SGB V; §§ 16, 18a, 18b, 114 SGB IV, gesetze-im-internet.de, accessed on 14 October 2026
• § 32a EStG in the version applicable for 2026 (Steuerfortentwicklungsgesetz, BGBl. 2024 I Nr. 449)
• BSG, Urteil vom 28.06.2022, B 12 KR 11/20 R (allowable rental expenses in contribution assessments)
• Social insurance calculation parameters for 2026 and average supplementary contribution of 2.9% (BMG announcement), summarised at haufe.de and vdek.com, accessed on 14 October 2026
• Current pension value of €42.52 from 1 July 2026, survivor’s pension allowance at 26.4 times this value, Deutsche Rentenversicherung
• SPD party executive, resolution on the health levy, February 2026, reported by zdfheute.de and pkv.de, among others
• Keyword data: Semrush, Germany database, as at 14 October 2026

Please note: This guide provides general information and is not a substitute for tax, legal or pension advice. Your health insurer can confirm your insurance status, and Deutsche Rentenversicherung can answer questions about survivor’s pensions.