FAQ About Buying Real Estate in Germany
Can anyone buy property in Germany?
Yes, regardless of nationality.
Do I need a permanent residence?
No, it is not necessary for purchasing property but owning property does not automatically give you the right to live and stay in Germany. You need to apply for a visitor’s visa or permanent residency. Regulations and entry requirements should be checked with the Embassy.
Do I need a translator?
If one of the parties does not speak German, a qualified translator is required to make sure all persons understand the content of the purchasing agreement.
What are the associated costs to purchase?
Usually all transaction costs are paid by the buyer and are about 14% of the purchase price.
- Real estate agent commissions including VAT – in Berlin are typically 7.14% of purchase price depending on type of real estate and location
- Property transfer tax – 6% of purchase price
- Notary public and land registration – 1.5% of purchase price
- Certified translator: approximately 1.000-2.000 Euro
- Legal advice (depending on transaction size) approximately 1.500 Euro …
What are the costs of owning commercial property?
The costs of owning property depend heavily on the agreed provisions of the lease contract and the type of lease. Whereas there are more options for commercial lease contracts it is not true that it is easy to pass on ancillary expenses to residential tenants, German law tends to favor residential tenants. However, generally speaking all costs except maintenance, repairs and property management may be passed on to the tenant. Furthermore, it’s up to the investor to accumulate a structural reserve.
The costs of property management vary from 25-35 Euro plus VAT per apartment unit per month.
What is a notary public?
In Germany the notary plays an important role in contractual agreements relating to special laws such as
- property law
- registration of land
- family law
- corporate law
- inheritance law
The notary is a solicitor, who acts on behalf of the government and is authorized to certify deeds. He provides independent and impartial advice to contractual parties. The notary officiates either as a single-profession notary, which means he is acting a a notary only or as a legal attorney and notary at the same time.
The notary prepares the deeds in accordance with German law and provides legal advice regarding the contract. He will read aloud the deed in front of all parties involved. The deed is signed by all parties and sealed by the notary. It is irrevocable.
In comparison to the USA or UK, the role of the German notary is much more important in daily business. All property transactions must be signed and sealed at the office of the notary public (311 of the German Civil Code).
Standard non-reocurring transaction costs based on the purchase price when buying real estate in Berlin, Germany:
● 6% commission (+19% VAT = 7.14%)
● 6% property transfer tax
● 1.6% notary + registry fees
These total 13.6% of the total purchase price.
If you are a non-resident and would like to partially finance your purchase with a loan, German banks may grant a loan up to 60% of the purchase price. Maturity does not exceed 30 years and the interest rate is usually fixed for a period of 10 years. After the end of this fixed term, the outstanding amount can either be paid back or a new arrangement is made.
Double Taxation Agreements
Germany has made tax treaties with about 90 countries to avoid double taxation. These agreements aim to avoid taxpayers being charged taxes on the same income more than once.
Property Tax (Grundsteuer)
This is an annual tax with quarterly instalments. The calculation depends on the city and the age and value of the property.
Taxes on Rental Income (Mieteinahme)
The tax rate is progressive and ranges from 0% to 45%. On top of the income tax, a solidarity surcharge is levied at a rate of 5.5%. If you purchase your property to rent out, the taxable income is calculated as follows:
+ Rental Income
– Depreciation (2% per year)
– Loan payments
– Property management costs
– Property tax
= Taxable Income
[at home] partners with competent lawyers, tax advisors and financial experts who are able to advise the most effective means to purchase or finance real estate.
There are three types of documentation needed in order to appropriately apply for financing. Once all documents are provided, it will take approximately three to five days for the approval process. All documents have to be in German or English.
● copy of passport
● signed mortgage application form
● last 3 salary pay-slips
● last 2 bank account statements
● last 2 income statements
● verification of equity
● sales brochure/exposé of the property
● building specifications / architectural drawings (Baubeschreibung und Grundrisse)
● living and useable area calculation (Flächenberechnung)
● total cost calculations
● official site plan (Flurkarte)
● certificate of title (Grundbuchauszug)