Frequently Asked Questions
Do I have to be a German resident in order to buy in Germany?
No. Anyone with the necessary funds and a valid passport can buy and own property in Germany
Purchasing costs when buying property in Germany?
In Germany, the buyer should expect the following purchase costs when buying property:
- Property Acquisition Tax („Grunderwerbssteuer“): in Berlin this is 4.5% of the purchase price. Due to pay about four weeks after the notary deed has been signed by the buyer and the seller.
- Notary fees: These are about 1% - 1.5% of the purchase price. Property registration at the Land registry office are between 0.6 - 1%.
- If financing is needed, there may also be fees from the bank for the mortgage, plus any additional notary and registration fees for that mortgage. Any mortgage needs to be secured in the land registry (Grundbuch) and that can only be done by a notary public. Mortgage costs are approximately 1% of the mortgage amount.
- Legal representation: A reduced rate has been arranged for Berlin Capital Investments clients
- At the notary date the real estate agent‘s or broker‘s
commission has to be paid. This is 5.95% of the
purchase price, including value added tax (VAT).
As a general rule of thumb, the total fees on top of the purchase price are approx 10%.
What are the costs of owning property in Germany?
The costs that are to be paid are property tax - this is different from town to town but very small (between 150 Euro and 300 Euro usually for an apartment per year, a bit more for a single-house; it depends on the size of the property ground).
Then the building reserve fund which is mandatory when owning an apartments as part of a community; it is usually about € 0.50 to € 1.5 Euro per sqm living area per month. Garbage disposal, water, common house electricity, housekeeping, maintenance of the heating system etc. are additional costs which sum up to about € 2,50 to € 3,50 per sqm and month. All of these have to be paid by the tenant if the apartment or house is rented out. Even the property tax normally needs to be refunded by the tenant to the owner or should be made part of the normal utilities prepayments.
For handling the complexity of all those payments, it is advisable to open a German bank account. Opening an account in a German bank is recommended to do during a visit to Germany and we can assist with this.
What are the tax implications during the rental period?
We are not tax advisors and in any single instance the tax issues should be studied and explored carefully with a specialist. As an individual you are required to pay tax on the rental income. The amount of tax depends on a sliding scale which starts around 25% and goes up to 42%, to which the so-called „Soli“ of 5.5% has to be added. “Soli” is an extra tax based on the tax you pay, which is meant for the rebuilding of the eastern part of Germany. Depreciation, interest and advertising or management expenses can be deducted. Depreciation is usually 2% per year, based on the purchase costs minus value of the ground, as this is not depreciable.
Any private person who is receiving rental income in Germany, even if not living here, must fill in and sign his annual „Steuererklärung für beschränkt Steuerpflichtige“, which is a special tax declaration sheet for people who are not paying their normal income tax in Germany. The effects this has upon your tax duties in your home country must be checked there with a competent advisor.
Please note that if a foreign company which is non resident in Germany purchases and rents out property, the tax issues are slightly different, and if this is the case we strongly suggest you consult a specialist in German tax laws to determine what you would be required to pay and we can assist you with this.
Who takes care of the property when I am not in Germany?
Any house can be given into the care of a property management company. On apartments this is now mandatory when the apartment belongs to a partitioned apartment building. The cost for property management is generally between € 25 and € 30 per month for an apartment. Rental management is separate from general house management and can be transferred to the administrator or an agency for about the same rate.
What tax do I have to pay when selling the property?
Currently, the law provides that if you sell before ten years after the purchase date, the profit is taxed. Again, this follows the sliding scale rule. But watch for the catch 22, as the depreciation claimed in that period is either declared void or added to the sales profit. This applies only to properties which were rented out. Owner-used property usually can be sold without tax on the profit after two years.
After the ten year holding period the profit is tax-free as per the current regulations for individuals - not for companies.
Next: You‘re interested?
Contact Us
Best Real Estate
Agency Europe
In 2011 for the first time in the history of the European Property Awards, a German real estate company has been selected as best estate agent in Europe.
Important Pages
Königsdächer
House Charlotte
one2one
yoo Berlin inspired by Starck
The Charleston
Fellini Residences
Theising Residence
Cölln Palais
Living 106
Subscribe to our Newsletter
Property in Berlin | Real Estate Agency Berlin | Real Estate Berlin | Real Estate Germany