What Taxes Do You Really Pay When Buying Property in Germany?

•12 min read

A 2026 guide to Grunderwerbsteuer, Grundsteuer, rental-income tax, disposal tax rules and buying costs

Suggested author: German Immo Flow Research Last verified: 2026-05-11 Intended audience: Buyers of owner-occupied homes, landlords, and anyone modelling a property investment in Germany Note: This article is for general information only. It is not tax, legal or investment advice. For a specific transaction, consult a Steuerberater, Notar or Fachanwalt.

Abstract

When buying property in Germany, the real cost of ownership is not determined by the purchase price, mortgage rate and monthly instalment alone. One-off Grunderwerbsteuer (real estate transfer tax), recurring Grundsteuer (annual property tax), the income-tax treatment of rental income, and potential tax consequences on a later sale can all materially change a property’s after-tax cash flow.

This article uses German statutory sources, guidance from the Federal Ministry of Finance, the DNotI transfer-tax table dated 28 January 2026, and publicly available German property-transaction material to summarise the main taxes and transaction costs a buyer should understand. It includes a 16-state table of current Grunderwerbsteuer rates and a worked example for a €500,000 apartment in Berlin. The key conclusion is simple: a German property should not be modelled as “purchase price + down payment + monthly mortgage”. A sound calculation should use the after-tax total-cost view: purchase price + transfer tax + notary/land-registry fees + agent commission + holding tax + rental and disposal tax effects.

Keywords: German property purchase, Grunderwerbsteuer, Grundsteuer, Spekulationssteuer, Kaufnebenkosten, German mortgage, real estate investment, IRR

1. Framing the question: what counts as a “tax” when buying property in Germany?

The taxes and tax-like costs around a German property purchase can be grouped by timing:

Stage German term Practical meaning Does every buyer face it?
Purchase Grunderwerbsteuer Real estate transfer tax In most standard purchases, yes
Holding period Grundsteuer Annual property tax / municipal real estate tax In most cases, yes
Rental period Einkommensteuer auf Mieteinnahmen Income tax on rental income Only if the property is rented out
Sale Private Veräußerungsgeschäfte / often informally called Spekulationssteuer Taxable gain may arise on a sale within 10 years Depends on holding period and own-use status
Special case Zweitwohnungsteuer Second-home tax Only in some municipalities and situations

In addition, Notar fees, Grundbuch fees and Maklerprovision are not taxes in the strict legal sense. But together with transfer tax, they form the most important Kaufnebenkosten—transaction costs that must be included in any affordability, cash-flow or IRR calculation.

2. Grunderwerbsteuer: the largest one-off tax at purchase

2.1 Definition and basic formula

Grunderwerbsteuer is the central one-off tax in a German real estate transaction. In a standard purchase, it is generally calculated by applying the transfer-tax rate of the federal state where the property is located to the purchase price:

Grunderwerbsteuer = purchase price × applicable state rate

Section 11 of the German Real Estate Transfer Tax Act (Grunderwerbsteuergesetz, GrEStG) sets a base rate of 3.5%.1 However, the federal states may set their own applicable rates. According to the DNotI table dated 28 January 2026, current state rates range from 3.5% to 6.5%.2

2.2 Who pays it?

From a statutory perspective, Section 13 GrEStG defines the tax debtor in the transaction.3 In residential purchase contracts, however, the parties commonly agree that the buyer bears the Grunderwerbsteuer. In practical terms, buyers should treat it as a cash cost that must be funded at closing.

2.3 Example

Suppose you buy an apartment in Berlin for €500,000. Berlin’s current Grunderwerbsteuer rate is 6.0%. The transfer tax is therefore:

€500,000 × 6.0% = €30,000

This €30,000 is not part of the property price itself and is not always covered by a standard residential mortgage. It increases the equity and liquidity required at acquisition and reduces the initial return on an investment property.

3. 2026 Grunderwerbsteuer rates across Germany’s 16 federal states

The following table is based on the DNotI document “Aktuelle Grunderwerbsteuersätze, Stand: 28.01.2026”.2

Federal state Rate Tax on a €500,000 property
Baden-Württemberg 5.0% €25,000
Bayern 3.5% €17,500
Berlin 6.0% €30,000
Brandenburg 6.5% €32,500
Bremen 5.5% €27,500
Hamburg 5.5% €27,500
Hessen 6.0% €30,000
Mecklenburg-Vorpommern 6.0% €30,000
Niedersachsen 5.0% €25,000
Nordrhein-Westfalen 6.5% €32,500
Rheinland-Pfalz 5.0% €25,000
Saarland 6.5% €32,500
Sachsen 5.5% €27,500
Sachsen-Anhalt 5.0% €25,000
Schleswig-Holstein 6.5% €32,500
Thüringen 5.0% €25,000

The same €500,000 property triggers €17,500 of transfer tax in Bavaria, but €32,500 in North Rhine-Westphalia, Brandenburg, Saarland or Schleswig-Holstein. That is a €15,000 difference before considering notary fees, land-registry costs or agent commission. For German property buyers, the federal state is therefore not just a location label; it directly changes the amount of cash required to close the purchase.

4. What is included in the Grunderwerbsteuer base—and what may be excluded?

4.1 General tax base

Section 9 GrEStG states that the consideration for a purchase generally includes the purchase price and other benefits or obligations assumed by the buyer.4 In plain language, the tax office looks at what the buyer economically gives in order to acquire the real estate.

Items typically included in the tax base include:

  1. the purchase price for the building and land;
  2. other contractual obligations assumed by the buyer in order to acquire the property;
  3. in certain structures, construction, delivery or related arrangements that are economically inseparable from acquiring a usable property.

4.2 Movable items may be excluded

In second-hand property transactions, furniture, movable equipment, kitchen fittings or other Inventar sold together with the property may be excluded from the Grunderwerbsteuer base if properly itemised. The Notarkammer Koblenz notes that when buyers also acquire a fitted kitchen, furniture or other movable items, and those items are separately priced in the notarised purchase contract, that portion is usually not subject to transfer tax.5

This is not a licence to artificially split the purchase price. The amounts should be reasonable, documented and defensible—ideally supported by an inventory list, valuation or receipts. Otherwise, the tax office may challenge the allocation.

5. Do German property buyers also pay 19% VAT?

A common question is whether a buyer must add 19% Umsatzsteuer (VAT) on top of the purchase price.

For ordinary residential property purchases, the usual answer is: no, there is generally no additional 19% VAT on top of the price.

Section 4 no. 9(a) of the German VAT Act (Umsatzsteuergesetz, UStG) exempts transactions that fall within the scope of the Real Estate Transfer Tax Act from VAT.6 The Federal Ministry of Finance’s VAT application guidance also explains that transactions falling under the GrEStG include transactions involving both developed and undeveloped land.7

Commercial property transactions, developer structures, business-to-business deals or transactions where VAT treatment is opted into can be more complex. A typical owner-occupier buying a residential apartment should not automatically add 19% VAT to the purchase price, but unusual structures should be reviewed by a notary or tax adviser.

6. Grundsteuer: the annual property tax after purchase

6.1 What is Grundsteuer?

Grundsteuer is the annual municipal property tax payable during the holding period. It differs from Grunderwerbsteuer: the latter is a one-off tax on acquisition, while Grundsteuer is recurring.

The Federal Ministry of Finance explains that Grundsteuer is levied on Grundbesitz, including land and buildings, and is generally paid by the owner.8

6.2 Basic calculation logic

The Federal Ministry of Finance describes the calculation of the reformed Grundsteuer as follows:

Grundsteuer = Grundsteuerwert × Steuermesszahl × Hebesatz

The Hebesatz is set by the municipality.9 As a result, properties with similar values can have different annual Grundsteuer amounts depending on the city or municipality.

6.3 Can landlords pass it on to tenants?

For rented property, Grundsteuer can usually be allocated to the tenant through operating costs if the lease and the operating-cost provisions allow it. Section 2 no. 1 of the German Operating Costs Ordinance (Betriebskostenverordnung) includes ongoing public charges on the property and explicitly refers to Grundsteuer.10

For landlords, this means Grundsteuer is legally the owner’s tax responsibility, but it may also be a pass-through operating cost in the rental relationship. The actual treatment depends on the lease wording and the practical billing arrangement.

7. Rental property: how is rental income taxed?

7.1 Rental income falls under income tax

If the property is rented out, rental income is usually not tax-free cash flow. Section 21 of the German Income Tax Act (Einkommensteuergesetz, EStG) classifies income from renting and leasing real estate, buildings or parts of buildings as Einkünfte aus Vermietung und Verpachtung.11

This does not mean that tax is levied on gross rent without deductions. In practice, the taxable result depends on rental income minus deductible expenses.

7.2 Common deductible items

Costs that often matter for a rental-property tax calculation include:

  • the interest portion of the mortgage;
  • property-management expenses related to the rental;
  • repairs and maintenance;
  • parts of the Hausgeld that cannot be passed on to tenants;
  • letting or management services;
  • building depreciation (AfA);
  • parts of acquisition or transaction costs, depending on their tax treatment.

The principal repayment portion of a mortgage instalment is not an expense. This is a frequent source of confusion: for income-tax purposes, the interest and principal parts of the same monthly payment are treated very differently.

7.3 AfA: depreciation matters for investment modelling

German income-tax guidance on Section 7 EStG indicates the following broad straight-line depreciation rates for residential buildings:12

Completion date of the building Common straight-line AfA
Completed after 31 December 2022 3.0% per year
Completed after 31 December 1924 and before 1 January 2023 2.0% per year
Completed before 1 January 1925 2.5% per year

For investors, AfA affects after-tax cash flow. A quick calculation such as “cold rent minus mortgage payment minus Hausgeld” is therefore not enough to understand the real after-tax return.

8. Selling the property: when does Spekulationssteuer become relevant?

The term Spekulationssteuer is widely used in everyday German, but it is not a separate tax with its own fixed rate. It usually refers to the income-tax treatment of private disposal gains under Section 23 EStG.

8.1 The 10-year rule

Section 23 EStG provides that private disposal transactions involving land and similar rights may be taxable if the period between acquisition and sale does not exceed 10 years.13

In practical terms:

  • Rental property: if sold at a profit within 10 years, the gain must be examined carefully for income-tax consequences.
  • Holding period over 10 years: a private sale will generally no longer fall under this private-disposal rule.
  • Owner-occupied property: an own-use exemption may apply even if the property is sold within 10 years.

8.2 Own-use exemption

Section 23 EStG also provides an exception where the property was used only for the taxpayer’s own residential purposes between acquisition and sale, or in the year of sale and the two preceding years.13

This means the tax result can differ sharply between an owner-occupier and a landlord. An investor planning to exit after five to eight years should model the after-tax sale proceeds, not just the nominal sale price.

9. Zweitwohnungsteuer: relevant only for second homes

Zweitwohnungsteuer is a second-home tax. It is not a uniform federal tax; municipalities decide whether to levy it. The Berlin service portal describes the tax in the context of secondary residences (Nebenwohnungen).14

This tax is not tied to homeownership as such. A rented second home can also be affected, while a purchased property used as the buyer’s main residence generally is not. Typical situations include:

  • working in one city while keeping the family home in another;
  • owning a holiday or weekend property in a German municipality;
  • maintaining a Hauptwohnung in one place and regularly using a second residence elsewhere.

Before buying a property that will not be your Hauptwohnung, check the municipality’s Zweitwohnungsteuer-Satzung.

10. Not taxes, but essential to the calculation: Notar, Grundbuch and Makler

10.1 Notary and land registry

German property purchase contracts require notarisation, and changes of ownership must be entered in the land register. Interhyp’s overview of buying costs estimates notary and land-registry costs at roughly 2% of the purchase price.15

These are not taxes, but they are almost unavoidable transaction costs in a German property purchase.

10.2 Agent commission

If the transaction is brokered by an estate agent, Maklerprovision may also be payable. The German Bundestag’s explanation of the 2020 legal reform notes that, in many residential transactions, the buyer’s share of the broker’s fee is generally capped at 50% of the total commission, with the buyer’s payment obligation linked to proof that the seller has paid their share.16

In the market, total commission is often around 5.95% to 7.14% including VAT; where buyer and seller split the commission equally, the buyer’s common share is often around 2.975% to 3.57%. The precise amount depends on region, contract and transaction structure.

11. Case study: a €500,000 apartment in Berlin

Assume you buy a Berlin apartment for €500,000. The transaction involves an estate agent, the buyer’s commission is estimated at 3.57%, and notary plus land-registry costs are estimated at 1.8%.

Item Calculation Amount
Purchase price — €500,000
Grunderwerbsteuer €500,000 × 6.0% €30,000
Notar + Grundbuch €500,000 × 1.8% €9,000
Maklerprovision €500,000 × 3.57% €17,850
Total acquisition costs excluding the price — €56,850
Total cash requirement before renovation €500,000 + €56,850 €556,850

The example shows why a “€500,000 property” can require nearly €557,000 before renovation or furnishing.

If an investment calculation ignores the €56,850 in acquisition costs, both ROI and IRR will be materially overstated.

12. Three common mistakes investors make

Mistake 1: modelling only the mortgage payment and ignoring transfer tax

Grunderwerbsteuer is a large one-off cash outflow. It does not increase your equity in the way principal repayment does, and it does not generate rental income. If it is missing from the initial cash flow, the IRR will look too high.

Mistake 2: treating Warmmiete as disposable rent

German Warmmiete includes operating costs. What supports debt service, repairs, taxes and investment return is closer to a net-rent view after operating costs, not the headline warm rent.

Mistake 3: planning a short holding period and forgetting Section 23 EStG

A rental property sold at a profit within 10 years may fall under the private-disposal rules. Short-hold investments need an after-tax exit model.

13. Pre-purchase tax and cost checklist

  1. In which Bundesland is the property located? Is the Grunderwerbsteuer rate 3.5%, 5.0%, 5.5%, 6.0% or 6.5%?
  2. Does the purchase price include movable furniture, a kitchen or equipment? Are those items separately listed in the notarised contract?
  3. What estimate is being used for Notar and Grundbuch costs: 1.5%, 1.8% or 2.0%?
  4. Is Maklerprovision payable? What is the buyer’s actual share?
  5. Will the property be owner-occupied or rented out?
  6. For a rental property, does the model distinguish between principal, interest, Hausgeld, repairs, AfA and income tax?
  7. What is the approximate annual Grundsteuer? If rented out, can it be allocated through operating costs?
  8. Is a sale within 10 years possible?
  9. If owner-occupied, are the own-use conditions under Section 23 EStG likely to be met?
  10. Is the property a second residence? Does the municipality levy Zweitwohnungsteuer?
  11. Are all acquisition costs included in the cash-flow and IRR calculation?
  12. Has the specific structure been checked with a notary, tax adviser or mortgage adviser?

14. Conclusion: the real number is the after-tax total cost

Buying property in Germany is not simply a matter of “purchase price + monthly mortgage payment”. A more realistic framework is:

True acquisition and ownership cost =
purchase price
+ Grunderwerbsteuer
+ Notar
+ Grundbuch
+ Makler
+ annual Grundsteuer during the holding period
+ rental-income tax effects
+ disposal-tax effects on sale

For owner-occupiers, the key issues are one-off transaction costs, future mortgage payments and annual Grundsteuer. For investors, the focus should expand to transfer tax, deductible costs, AfA, after-tax cash flow, the 10-year disposal rule and after-tax exit proceeds.

Before making a purchase decision, include Grunderwerbsteuer and all other Kaufnebenkosten in the model. A property that appears cash-flow positive on a headline basis may look very different once real taxes and transaction costs are included.

How to use German Immo Flow: Enter the purchase price, federal-state transfer-tax rate, mortgage rate, down-payment ratio, rent, Hausgeld, maintenance assumptions and expected sale price into German Immo Flow. Use the after-tax cash flow and IRR to judge whether a German property investment makes sense.

References

  1. Bundesministerium der Justiz. Grunderwerbsteuergesetz (GrEStG), § 11 Steuersatz, Abrundung. https://www.gesetze-im-internet.de/grestg_1983/__11.html ↩

  2. Deutsches Notarinstitut (DNotI). Aktuelle Grunderwerbsteuersätze, Stand: 28.01.2026. https://www.dnoti.de/fileadmin/user_upload/Arbeitshilfen/Steuerrecht/Aktuelle_Grunderwerbsteuersaetze_Stand_28_01_2026.pdf ↩ ↩2

  3. Bundesministerium der Justiz. Grunderwerbsteuergesetz (GrEStG), § 13 Steuerschuldner. https://www.gesetze-im-internet.de/grestg_1983/__13.html ↩

  4. Bundesministerium der Justiz. Grunderwerbsteuergesetz (GrEStG), § 9 Gegenleistung. https://www.gesetze-im-internet.de/grestg_1983/__9.html ↩

  5. Notarkammer Koblenz. Keine Grunderwerbsteuer für bewegliche Gegenstände. https://www.notarkammer-koblenz.de/meldung/keine-grunderwerbsteuer-fuer-bewegliche-gegenstaende/ ↩

  6. Bundesministerium der Justiz. Umsatzsteuergesetz (UStG), § 4 Steuerbefreiungen bei Lieferungen und sonstigen Leistungen. https://www.gesetze-im-internet.de/ustg_1980/__4.html ↩

  7. Bundesministerium der Finanzen. Umsatzsteuer-Anwendungserlass, Abschnitt 4.9.1 Umsätze, die unter das Grunderwerbsteuergesetz fallen. https://usth.bundesfinanzministerium.de/usth/2018-2019/A-Umsatzsteuergesetz/II-Steuerbefreiungen-und-Steuerverguetungen/Paragraf-4/ae-4-9-1.html ↩

  8. Bundesministerium der Finanzen. Fragen und Antworten zur neuen Grundsteuer, Abschnitt 1.1. https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-die-neue-grundsteuer.html ↩

  9. Bundesministerium der Finanzen. Fragen und Antworten zur neuen Grundsteuer, Abschnitt 1.3. https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-die-neue-grundsteuer.html ↩

  10. Bundesministerium der Justiz. Betriebskostenverordnung (BetrKV), § 2 Aufstellung der Betriebskosten. https://www.gesetze-im-internet.de/betrkv/__2.html ↩

  11. Bundesministerium der Justiz. Einkommensteuergesetz (EStG), § 21 Einkünfte aus Vermietung und Verpachtung. https://www.gesetze-im-internet.de/estg/__21.html ↩

  12. Bundesministerium der Finanzen. Einkommensteuer-Hinweise 2023, § 7 Absetzung für Abnutzung oder Substanzverringerung. https://esth.bundesfinanzministerium.de/esth/2023/A-Einkommensteuergesetz/II-Einkommen/3-Gewinn/Paragraf-7/inhalt.html ↩

  13. Bundesministerium der Justiz. Einkommensteuergesetz (EStG), § 23 Private Veräußerungsgeschäfte. https://www.gesetze-im-internet.de/estg/__23.html ↩ ↩2

  14. Service-Portal Berlin. Zweitwohnsteuer. https://service.berlin.de/lagen/1060500/ ↩

  15. Interhyp. Baufinanzierung: Kaufnebenkosten beim Kauf einer Immobilie. https://www.interhyp.de/baufinanzierung/ ↩

  16. Deutscher Bundestag. Maklerkosten-Aufteilung zwischen Käufer und Verkäufer. https://www.bundestag.de/webarchiv/textarchiv/2020/kw20-de-maklerkosten-695102 ↩