UK & Irish Estate Agents Selling Property in Germany

Thinking of buying or selling property in Germany? Buying a home is never as simple as paying the listed price, no matter where in the globe you may be. Also, there are a plethora of taxes and levies that aren’t immediately obvious. Buying a home in Germany is a big decision, so do your research first.

 

Mortgage and property taxes in Germany

The following is a brief summary of the various closing and purchase fees, taxes, and other charges that may be applicable to your German property transaction. Totaling roughly 15% of the buying price, they are as follows:

 

Land registration and notary costs

All contracts for the purchase of real estate in Germany must be witnessed by a notary public, who will then register the transaction in the relevant land registration. Typically, the fee for such assistance is 1% to 2% of the sales price of the property.

 

Expenses Paid to the Real Estate Agent

If you hired an agent to assist you look for a home, they may ask for a commission of 3% to 8% of the home’s sale price, plus VAT (currently 19%). The estate agent’s fee must be divided equally between the seller and the buyer as of December 2020.

 

Expenses incurred due to the payment of a property transfer tax (Grunderwerbsteuer)

After the sale is finalised, you’ll get a charge for a transfer tax from the federal state (Bundesland) where the property is located. The rates, which are assessed as a fraction of the selling price, change from one jurisdiction to the next.

 

Evaluation of Real Estate

A property valuation is usually required if the value of the property exceeds 500,000 Euros. Depending on your preference, you can spend anywhere from 100 euros to several thousand.

 

Taxation on Real Estate (Grundsteuer)

This yearly municipal tax is due to the local tax office (Finanzamt) in Germany and must be paid by all homeowners. In order to determine how much must be paid, multiply the property’s assessed value by the municipal tax rate (often between 0.26% and 1%).

 

How to Get a Loan to Pay for German Real Estate

Know that German banks seldom provide mortgage financing for closing fees, so be prepared to pay for them out of pocket or with other equity in the property.

If you were buying a home for €400,000, for instance, you’d have to pay an extra €60,000 in taxes, legal fees, and other charges. Your mortgage won’t cover these costs, therefore you need save up at least 60,000 Euros to pay the sale price. This doesn’t include the deposit of 20-40% of the property’s worth that your mortgage lender may want.

Closing costs, such as notary fees and property transfer tax, can be covered by applying for a KfW homeownership loan of up to 50,000 euros.

 

New homebuyers will face additional expenses

You should also include in other expenditures incurred by homeowners, such as those not directly related to taxes or legal fees. The following are included in this category:

  • The price of hiring a removal service
  • Modifications to the house
  • Stuff for the home, including furniture and decorative accents

 

Tax breaks

You may take advantage of favorable tax regulations in Germany if you decide to rent out your home. For tax purposes in Germany, landlords can deduct expenses incurred in the process of generating rent income (such as mortgage interest, repairs, and upkeep) from rent revenue. Filing your tax return annually is the only way to claim these deductions. You may wish to get the aid of a tax expert if you have a diverse revenue stream.

 

German property sales and capital gains taxation

Profits from the sale of property held for less than 10 years are subject to a 25% capital gains tax. However, if the house has been your primary residence for at least two years, you will be exempt from this rule. Therefore, when Germans buy property, it is more often a question of selecting a permanent residence than of entering the German housing market. If your trip in Germany will be brief, it’s important to keep this in mind. Contact us to buy or sell property in Germany fast online.

 

 

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