Taxes and fees when buying an apartment in Germany
30 October 2023
Buying a property in Germany involves several taxes and fees that can significantly impact your budget. Therefore, it's important to consult with professionals in this field.
With over 15 years of experience in the real estate market, ERA Development will help you properly assess all tax obligations and fees. Furthermore, we always stay updated on changes in tax laws.
Let's look at the key taxes when buying residential real estate in Germany:
- Property Acquisition Tax (Grunderwerbsteuer): This tax is levied when purchasing property and can vary significantly depending on the federal state (Bundesland) where the apartment is located. The average tax rate is around 5-6%, but it can be even higher in some regions. You must factor in this tax when budgeting for your property purchase.
- Real Estate Tax (Grundsteuer): This tax is collected annually and depends on the property's value, location, and other factors. It goes to the local budget and is used for financing infrastructure and public services in that region. The tax rate varies depending on the municipality.
- Notary and Agency Fees: When buying property in Germany, you must use the services of a notary and possibly a real estate agency. Typically, buyers cover these fees. The amount depends on the property's value and the region but generally constitutes a few percentage points of the property's cost.
- Registration Fee (Grundbuchkosten): This fee is associated with registering the transaction in the land register and may amount to a few hundred euros.
- Rental Income Tax (Einkommensteuer): If you rent out your property, you'll be subject to a rental income tax. The tax rate depends on your total income and can be substantial.
- Capital Gains Tax on Property Sale (Spekulationssteuer): If you sell your property within 10 years of purchase, the profit from the sale is subject to taxation. The tax rate depends on the holding period.
In conclusion, taxes and fees when buying an apartment in Germany can make the property purchase process more expensive and complex than it may seem at first glance. Nevertheless, Germany offers excellent opportunities for real estate investment due to its stable economy and high demand for rental properties. Therefore, despite the tax obligations, buying an apartment in this country can be an attractive long-term investment.
For a detailed consultation on taxes and fees in the process of buying or selling a property in Germany, please contact us at +49 (30) 516 417 63 or leave your request in the contact form.
