Roundtrip costs are moderate to high in Germany
Taxation Researcher | June 05, 2020
How high are realtors´ and lawyers´ fees in Germany? What about other property purchase costs?
|Real Estate Transfer Tax||3.50% - 6.50%||buyer|
|Notary Fees||1.20% - 1.50%||buyer|
|Registration Fees||0.80% - 1.20%||buyer|
|Broker´s (Makler´s) Fee||1.5% - 3% (+ 19% VAT)
1.5% - 3% (+ 19% VAT)
|Costs paid by buyer||7.23% - 12.77%|
|Costs paid by seller||1.79% - 3.57%|
|ROUNDTRIP TRANSACTION COSTS||9.02% - 16.34%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in Germany?
There are no restrictions on foreign nationals buying property in Germany. Financing is possible for foreigners, but should not be expected to cover more than 60% of the purchase price.
The process of buying property in Germany involves the following:
- Make an offer via your agent (Makler), who will convey your bid either through the seller´s agent or to the seller directly. You may find yourself competing in a quasi-auction with your Makler, who will handle rival bids from other prospective buyers.
- When the seller accepts your offer, ask your Notar to draw up the contract. It would be a good idea to hire the services of an English-speaking Notar. A contract must show:
- Correct names and addresses of the parties and details of the property. An error, especially in the property details, could at least partially invalidate the contract.
- The agreed upon purchase price and terms and conditions of payment.
- Stipulations as to what happens in the event either party fails to live up to the terms of the contract.
The parties can freely decide on payment terms. The buyer is advised to check the property for any major defects because the notary is not responsible for this. The seller is required to disclose any hidden defects, but is not obliged to point out any defects that should have been obvious to the buyer. The Notar is responsible for the legal work and contract obligations, and checks that no liabilities exist.
- an entry has been made in this land register,
- previous mortgages have been cleared, and
- the tax office has certified that the seller has no property taxes outstanding.
It takes an average of 95 days to complete all the four procedures needed to register a property in Germany.
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property - lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.
Real Estate Transfer Tax (Grunderwerbsteuer)
Real estate transfer tax is levied at a basic rate of 3.5%, and the rate can be higher depending on the federal state where the property is located.
Real estate transfer tax is levied at 3.5% in the federal states of Bavaria and Saxony; at 4.5% in Hamburg; at 5% in Baden-Wurttemberg, Brandenburg, Hesse, Mecklenburg-Pomerania, North Rhine-Westphalia, Rhineland-Pfalz, Saxony-Anhalt and Thuringia;5.5% in Saarland; at 6% in Berlin; and at 6.5% in Schleswig-Holstein.
Real estate transfer tax is due about four weeks after the notary deed has been signed by buyer and seller.
Notary fees are fixed by law and depend on the kind of agreement and the value of the property. Notary fees usually range from 1.20% to 1.5% of the purchase price. German law requires that sale and purchase agreements be notarized.
|PROPERTY VALUE, (€)||RATE €|
|Up to €500||€10|
|€500 - €2,000||increase of €8 for every €1,000|
|€2,000 - €10,000||increase of €6 for every €3,000|
|€10,000 - €5 million||increase of €15 for every €10,000|
|Source: Global Property Guide|
The buyer must pay registration fee to have his name entered in the local land registry (Grundbuch) as the legal owner. Registration fee is fixed by law, depending on the value of the property.
Real Estate Agent´s Fee
Agent´s fee in Germany varies in each federal country and ranges from 3% to 6%, plus 19% VAT. The actual value is negotiable and depending on the agreement negotiated between parties, whether broker´s fee will be paid either by the buyer or the seller, or split between the two.
Value Added Tax (VAT)
Value Added Tax (VAT) is levied at a flat rate of 19%.
Agent´s fee in Germany varies in each federal country and ranges from 3% to 6% plus 19% VAT. The actual value is negotiable and depending on the agreement negotiated between parties, borker´s fee will be paid either by the buyer or the seller, or split between the two.