header banner
Default

The taxes, fees, and costs associated with purchasing a home in Germany


No matter where in the world you are, buying a house is never purely a matter of the asking price. There are lots of hidden fees and taxes involved as well. Make sure you are aware of all the costs before you commit to buying a house in Germany.

Taxes and fees for homebuyers in Germany

VIDEO: How Much Money Do I Need to Buy Property in Germany?🇩🇪
Hypofriend

Below is a quick overview of the taxes, costs and fees incurred when you buy a property in Germany (often referred to as “closing fees” or “purchase fees”). Altogether, they amount to around 15% of the purchase price:

Notary & Land registration fees

VIDEO: Don't buy a home in Germany without watching this! (Investing in Real Estate in Germany)
Ahsan Finance

Purchase contracts in Germany must be signed in the presence of a notary, who also records the property sale in the land registry. The charge for these services is usually around 2% of the property’s sale price.

Estate agent’s fees

VIDEO: The TRUE Cost of Buying a Home in Germany
PerFinEx

If you used a real estate agent to help you find a house you may incur charges, somewhere in the region of 3,5 to 8% of the sale price, plus VAT at 19%. Since December 2020, it has been a legal requirement for the seller and the buyer to split the estate agent's fee equally between them.

Property transfer tax (Grunderwerbsteuer)

VIDEO: How to Buy a House in Germany with ZERO money
Ahsan Finance

After your purchase is finalised, you will receive a bill from the federal state (Bundesland) where the property is located, requesting payment for a tax on property transfer. The rates, levied as a percentage of the sale price, vary from state to state:

Federal State Property Transfer Tax Rate

Bavaria

3,5%

Baden-Württemberg, Bremen, Lower Saxony, Rhineland-Palatinate & Saxony Anhalt

5%

Hamburg & Saxony

5,5%

Berlin, Hesse & Mecklenburg-Vorpommern

6%

Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein & Thuringia

6,5%

Property assessment

VIDEO: 5 Things I wish I knew Earlier About German Real Estate
American Guy in Germany

If your property is worth more than 500.000 euros you may also need to pay for a property assessment. There are several ways of doing this, costing anything from 100 to several thousand euros.

Real property tax (Grundsteuer)

VIDEO: How To Own A €500000 House In Germany | Ajay Dhingra
Ghar In Germany

Payable to your local tax office (Finanzamt), this annual municipal tax is mandatory for all property owners in Germany. The amount payable is calculated by multiplying the assessed value of the property with the local tax rate (somewhere between 0,26% and 1%). 

As of 2023, Germany is in the process of overhauling the way it calculates real property tax rates; the new rates will be payable from 2025. 

Financing property fees in Germany

VIDEO: Buying a House in Germany | What we Learned as Expats & Answering the BIG Questions
Type Ashton

Anyone who is considering taking out a mortgage should be aware that these closing costs are rarely financed by German banks via mortgages, and must be covered by your own equity.

For example, if you were purchasing a property valued at 400.000 euros, you would incur additional fees of approximately 60.000 euros. These fees cannot be covered by your mortgage, meaning you would need at least 60.000 euros of capital to cover the cost of sale. This excludes any equity required as a deposit by your mortgage lender, which can be as much as 20 - 40% of the property’s value.

You can, however, apply for a KfW homeownership loan of up to 50.000 euros that can be used to cover closing costs like notary fees and property transfer tax.  

Additional costs for homebuyers

VIDEO: How Much House Can You Afford in Germany? Real Estate in Germany
Ahsan Finance

As well as the taxes and legal fees outlined above, there are additional costs homebuyers incur that you need to consider. This includes:

  • Removal costs, if you are using a moving company
  • Home repairs
  • Furniture and other household items
  • Home insurance

Tax deductions

VIDEO: How Much Home You Can ACTUALLY Afford (By Salary)
Graham Stephan

If you decide to rent your property in Germany you can take advantage of some attractive tax incentives. The German tax system allows landlords to deduct costs incurred in generating income from rent (e.g. mortgage interest, repairs and maintenance) from any income received from renting the property. You can take advantage of these deductions via your annual income tax return. If you have multiple sources of income, you may want to consult with a tax advisor to help you with your declaration. 

Capital gains tax & Selling your property in Germany

VIDEO: cost of living in GERMANY | housing, food, transport & more
hello erika

If you have owned your property for less than 10 years and choose to sell it, any financial gain made will be subject to capital gains tax of 25%. However, an exception is made if the property has been your main residence for at least two complete years. For this reason, when Germans buy property, it tends to be a case of choosing a long-term home, rather than attempting to get into the German housing market. This is worth bearing in mind if you will only be staying in Germany for a short period of time.

Sources


Article information

Author: Ryan Winters

Last Updated: 1704072242

Views: 2456

Rating: 4.6 / 5 (48 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Ryan Winters

Birthday: 1939-09-17

Address: 34779 Alexandra Hill, Lake Alejandrofurt, WY 02851

Phone: +3919852665724477

Job: Landscape Architect

Hobby: Badminton, Hiking, Painting, Yoga, Beekeeping, Backpacking, Wildlife Photography

Introduction: My name is Ryan Winters, I am a Open, persistent, esteemed, capable, honest, spirited, courageous person who loves writing and wants to share my knowledge and understanding with you.