close

Buying a house in Germany: Taxes, costs & fees

Buying a house in Germany: Taxes, costs & fees

Buying a house in Germany: Taxes, costs & fees

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

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

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

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%. Sometimes these real estate agency fees are split between the buyer and the seller.

Property transfer tax (Grunderwerbsteuer)

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 & Saxony

3,5%

Hamburg

4,5%

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

5%

Berlin & Hessen

6%

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

6,5%

Property assessment

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)

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%). 

Financing property fees in Germany

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

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

Tax deductions

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

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%. For this reason, when Germans buy property, it tends to be a case of choosing their home for life, 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.

Read also

  • Buying a house in Germany

    Buying a house in Germany

    Before you can fulfil your dream of owning your own home in Germany, you need to think about taxes, allowances, real estate agents & mortgages.
    read more
  • Mortgages for expats in Germany

    Mortgages for expats in Germany

    Wanting to get a mortgage to buy a property, apartment or house in Germany? Check out our list of German mortgage providers for expats and internationals.
    read more
  • Allowances, loans & subsidies for homeowners in Germany

    Allowances, loans & subsidies for homeowners in Germany

    Make use of subsidies in Germany that promote homeownership, including KfW loans for buyers and energy-efficient building, child benefits & Riester scheme.
    read more
  • Buying a house in Germany: Checklist

    Buying a house in Germany: Checklist

    Here's a checklist to get you started on your house hunt in Germany. Think about housing market, financing, location, rent, utilities & additional costs.
    read more
  • German mortgages (Hypothek / Darlehen)

    German mortgages (Hypothek / Darlehen)

    Our expat guide to German mortgages, including mortgage advisors, requirements & documents, types of mortgages and the application process in Germany.
    read more
  • German tax services & advisors in Germany

    German tax services & advisors in Germany

    In need of tax advice or tax services in Germany? Have a look at our list of German tax consultants, advisors and accountants for expats.
    read more