What taxes do you really pay when buying property in Germany?

The purchase price, mortgage rate and monthly payment tell only part of the story when you buy property in Germany. One-off taxes and fees determine how much cash the purchase actually requires. During ownership, recurring charges add to the bill; if you rent out or sell the property, income-tax rules determine what remains after tax.

Two German taxes are easy to confuse: Grunderwerbsteuer (real estate transfer tax) is charged on the purchase, while Grundsteuer (annual property tax) is charged during ownership. Together with Kaufnebenkosten (ancillary purchase costs), they should be built into the budget from the outset. This guide follows the usual timeline from purchase to ownership and eventual sale. It reflects the law and official guidance available on 2 August 2026 and includes a worked example for a €500,000 Berlin apartment.

Quick answer: taxes and costs by stage

The German terms Notar (notary), Grundbuch (land register) and Maklerprovision (estate-agent commission) often appear in property listings and contracts. These costs are not taxes, but they form a major part of the ancillary purchase costs and belong in any financing or return calculation.

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1. Real estate transfer tax: the largest one-off tax

1.1 Calculation and tax rate

For an ordinary property purchase, real estate transfer tax is generally calculated on the purchase price:

Real estate transfer tax = taxable consideration × state tax rate

Section 11 of the Grunderwerbsteuergesetz (GrEStG) (Real Estate Transfer Tax Act) sets a base rate of 3.5%.¹ The federal states may set a different rate, so the rates actually in force in 2026 range from 3.5% to 6.5%.

1.2 Liability, payment and registration of ownership

Under section 13 GrEStG, the contracting parties are generally liable for the tax.² Purchase contracts almost always state that the buyer bears it in economic terms. That contractual allocation does not bind the tax office if the bill remains unpaid.

The sequence matters for cash planning:

1. The notary reports the notarised contract to the tax office.
2. The tax office issues a tax assessment.
3. Unless the assessment sets a later date, payment is normally due one month after the assessment is notified.³
4. Once the tax has been paid, the tax office issues an Unbedenklichkeitsbescheinigung (tax-clearance certificate). As a rule, the land registry cannot register the buyer as the new owner without it.⁴

There is therefore no universal payment date tied to notarisation or handover. The assessment and its payment deadline control the timing.

1.3 Important exemptions

An ordinary arm’s-length purchase between unrelated parties is normally taxable. Section 3 GrEStG nevertheless exempts several transactions, including acquisitions by inheritance and gifts of land, as well as certain transfers between spouses, registered civil partners and direct-line relatives.⁵ Exemption from real estate transfer tax does not necessarily remove inheritance- or gift-tax consequences.

1.4 Short Berlin example

Berlin currently applies a rate of 6.0%. For an apartment priced at €500,000:

€500,000 × 6.0% = €30,000

That €30,000 increases the cash required for the purchase. Whether a lender finances any ancillary costs depends on the borrower, the property’s lending value and the mortgage structure.

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2. Real estate transfer tax rates in all 16 states in 2026

The table uses the DNotI schedule with a source date of 28 January 2026. We last checked the German Notary Institute’s tax-resources page on 2 August 2026; on that date, the schedule dated 28 January 2026 was still the current version published there.⁶

To match the official schedule and the calculator, the table keeps the German state names. The less obvious English equivalents are Bayern (Bavaria), Hessen (Hesse), Mecklenburg-Vorpommern (Mecklenburg-Western Pomerania), Niedersachsen (Lower Saxony), Nordrhein-Westfalen (North Rhine-Westphalia), Rheinland-Pfalz (Rhineland-Palatinate), Sachsen (Saxony), Sachsen-Anhalt (Saxony-Anhalt) and Thüringen (Thuringia).

On a €500,000 purchase, the bill is €17,500 in Bavaria but €32,500 in Brandenburg, North Rhine-Westphalia, Saarland or Schleswig-Holstein. Location alone creates a €15,000 difference.

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3. Tax base: what is included?

3.1 Consideration is the starting point

Under section 9 GrEStG, tax on a purchase is normally based on the value of the consideration.⁷ This principally means the purchase price plus other obligations assumed in order to acquire the property. Where land and construction agreements form a single economic arrangement, the wider package may sometimes form the tax base.

3.2 List movable items separately

Movable items sold with the property—such as furniture, freestanding appliances or a fitted kitchen—are not themselves part of the real estate. Their realistic value may therefore be excluded if the items and individual amounts are clearly recorded in the notarised contract.⁸

The tax office will not accept an arbitrary allocation. An inventory, the age and condition of each item, and supporting receipts should make the values credible.

3.3 A maintenance reserve does not reduce the tax

When a condominium is sold, the buyer economically takes over the unit’s share of the owners’ Erhaltungsrücklage (maintenance reserve). Showing that share separately in the contract does not reduce the consideration subject to real estate transfer tax. Germany’s Federal Fiscal Court has expressly confirmed this for condominium purchases.⁹

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4. VAT: is another 19% added to the price?

An ordinary residential property purchase is normally not subject to an additional 19% VAT charge on top of the agreed price. Transactions covered by GrEStG are generally VAT-exempt under section 4(9)(a) of the German VAT Act.¹⁰

Commercial property and particular business structures can be different. Under the conditions in section 9 of the VAT Act, a seller may waive the exemption and opt to charge VAT.¹¹ That is unusual for a private apartment buyer, but the VAT treatment should be settled before notarisation in a commercial or structured transaction.

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5. Notary, land register and estate agent: costs rather than taxes

5.1 Notary and land-register fees

A contract to purchase land or an apartment must be notarised.¹² Entries must also be made in the land register, often including the lender’s security where the purchase is financed. Notarial and court fees are set under the German Court and Notary Costs Act; they are statutory rather than freely negotiable.¹³

The worked example uses 2.0% of the purchase price as a combined planning allowance for the notary and land register. This is not a statutory flat rate. The actual figure depends on the price, transaction steps and financing.

5.2 Estate-agent commission and allocation rules

There is no nationwide fixed commission rate. Special rules apply to brokerage contracts for apartments and single-family houses: the contract must be in text form. If the agent acts for both buyer and seller, the two commissions must generally be the same. If only one party engaged the agent, no more than half of that party’s cost may be passed to the other side; the engaging party must retain at least an equal share and pay it before reimbursement becomes due. The latter allocation rules apply only where the buyer is a consumer.¹⁴

They do not automatically cover apartment buildings, undeveloped land, commercial property or a buyer acting in business. In the Berlin example, 3.57% including 19% VAT is simply an assumed buyer’s share—not a statutory or universal market rate.

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6. Annual property tax: the recurring charge during ownership

6.1 The reformed system has applied since 2025

Annual property tax is a municipal tax on real estate. The reformed rules have applied since 1 January 2025. It is separate from the one-off tax paid on a purchase.¹⁵

6.2 Federal model and state models

Under the federal model, the simplified formula is:

Annual property tax = assessed property value × tax assessment factor × municipal multiplier

The German components are Grundsteuerwert (assessed property value), Steuermesszahl (tax assessment factor) and Hebesatz (municipal multiplier). The formula does not apply unchanged throughout Germany. Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony use comprehensive state models. Berlin, Bremen, Saarland and Saxony broadly follow the federal model but use different assessment factors in 2026. Municipalities in North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt and Schleswig-Holstein have wider powers to set differentiated multipliers. Thuringia’s different assessment factor takes effect only in 2027. In every model, the municipality sets its multiplier.¹⁵

For a reliable annual figure, use the property-tax assessment, the relevant state guidance and the municipality’s current multiplier. Purchase price or floor area alone is not enough.

6.3 Passing the charge to a tenant

For a rented property, annual property tax can be included in the tenant’s operating-cost settlement if the lease validly provides for it. Section 2(1) of the German Operating Costs Ordinance expressly lists the tax.¹⁶ The owner nevertheless remains liable to the municipality.

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7. Letting: what matters for income tax?

7.1 Tax is charged on the net result

Under section 21 of the German Income Tax Act, rent is income from letting and leasing.¹⁷ Germany does not apply a separate flat “rental tax rate”. The taxable rental result forms part of the owner’s taxable income and is charged at the applicable personal income-tax rate.

7.2 Running expenses, service charges and acquisition costs

Expenses connected with the letting may include mortgage interest, management fees, insurance, current repairs and letting costs.¹⁸ Mortgage principal is not deductible: it reduces the debt rather than taxable income.

For a condominium, Hausgeld (condominium service charge) should not be classified for tax solely by asking whether each item can be passed to the tenant. Recoverability under the lease and deductibility for income tax are different questions. The maintenance reserve is particularly important: contributions are not deductible when paid into the reserve. They become relevant only when the owners’ association actually spends the money on maintenance. The Federal Fiscal Court confirmed this again in 2025.¹⁹

The purchase price and acquisition costs must be allocated between land and building.²⁰ Only the building share qualifies for Absetzung für Abnutzung (AfA) (tax depreciation); land is not depreciable. Major repair and modernisation costs incurred within three years of purchase can also become anschaffungsnahe Herstellungskosten (acquisition-related construction costs that must be capitalised) if, excluding VAT, they exceed 15% of the building’s acquisition cost.²¹

7.3 Straight-line and declining-balance tax depreciation

Section 7 of the Income Tax Act generally provides the following straight-line rates for residential buildings:²²

Section 7(5a) also permits 5% declining-balance depreciation on the remaining book value for qualifying new residential buildings. In simplified terms, construction must have started—or the binding purchase contract must have been signed—after 30 September 2023 and before 1 October 2029. For a purchase, the building must also be acquired by the end of its completion year. The legislation contains further conditions.²²

The available and preferable method depends on the building and timing. Under either method, the land share remains outside the depreciation base.

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8. Sale: the ten-year period, owner occupation and the gain

The colloquial “speculation tax” is not a separate tax with a fixed rate. It means income tax on a private disposal under section 23 of the Income Tax Act.²³

8.1 Ten-year period and owner-occupation exemption

A gain on privately held property may be taxable if no more than ten years pass between acquisition and sale. The relevant dates are generally those of the binding purchase and sale contracts, not handover or land-register entry. An exemption applies if the property was used as the owner’s home either throughout the period between acquisition or completion and sale, or during the year of sale and the two preceding calendar years.²³

Once the ten-year period has expired, a private property sale will generally fall outside section 23. Different rules apply to business assets and commercial property trading.

8.2 €1,000 threshold and the depreciation effect

The taxable gain is not simply sale price minus original purchase price. In broad terms, the sale proceeds are compared with acquisition or construction costs and sale-related expenses. Acquisition or construction costs are reduced by tax depreciation and certain special allowances already claimed. Past depreciation can therefore increase the gain taxed on a later sale.²³

Total gains from all private disposals in a calendar year are tax-free if they are less than €1,000. This is a threshold, not an allowance: once total gains reach €1,000, the threshold no longer shelters the first €1,000. A taxable gain is charged at the individual’s personal income-tax rate.

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9. Second-home tax: a municipal question

Second-home tax is not levied under one nationwide system. Each city or municipality decides in its by-laws whether to tax a registered secondary residence, how to calculate the charge and which exemptions apply. Owners and tenants can both be affected.

If the purchased property will not be your main home, check the rules where it is located. Berlin’s official service page is one example of the registration and tax rules a municipality may adopt.²⁴ Berlin’s rules should not be assumed to apply elsewhere.

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10. Worked example: a €500,000 Berlin apartment

Assume you buy a Berlin apartment for €500,000. The budget allows 2.0% for the notary and land register. The assumed buyer’s estate-agent commission is 3.57% including 19% VAT.

Before renovation or furnishing, the apartment therefore costs €557,850. Both 2.0% and 3.57% are planning assumptions that must be replaced with figures for the actual transaction. Annual property tax, financing costs and the tax effect of letting are not yet included.

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11. Three common calculation mistakes

Mistake 1: Ancillary costs are missing from the cash requirement

Real estate transfer tax creates no extra property value but must be paid on time. Once notary, land-register and estate-agent costs are also omitted, the funding gap can easily reach five figures.

Mistake 2: Rent including utilities is treated as spendable income

Warmmiete (rent including operating-cost advances) contains advance payments for heating and other operating costs that do not belong to the landlord. A return calculation must allow for non-recoverable expenses, maintenance reserves, finance, vacancies and tax. Even Kaltmiete (net rent excluding operating costs) is only the starting point for cash flow.

Mistake 3: The sale model ignores depreciation and section 23

A sale within the ten-year period may trigger income tax, and depreciation claimed in earlier years can increase the taxable gain. A sale forecast should therefore show expected proceeds after costs and tax.

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12. Pre-purchase checklist

1. What real estate transfer tax rate applies in the property’s state?
2. When is the assessment expected, and is there enough cash for the one-month payment period?
3. Does an exemption under section 3 GrEStG exceptionally apply?
4. Are movable items valued realistically and listed individually in the contract?
5. Have notary and land-register fees been estimated for both the purchase and financing?
6. Is estate-agent commission payable, and do the allocation rules for an apartment or single-family house bought by a consumer apply?
7. Which annual property-tax model applies in the state, and what multiplier has the municipality set?
8. If the property will be let, are interest, principal, service charges and maintenance reserve kept separate?
9. How will the purchase price and ancillary costs be allocated between building and land?
10. Could straight-line or declining-balance depreciation and the 15% rule apply?
11. Is a sale within ten years likely, and should the owner-occupation exemption apply?
12. Will the property be a secondary residence, and does the municipality levy second-home tax?

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FAQ

When is real estate transfer tax payable?

There is no automatic payment date at notarisation or handover. After the purchase contract is reported, the tax office issues an assessment. Unless it states a later date, payment is generally due one month after the assessment is notified.³

Are notary, land-register and estate-agent charges additional taxes?

No. They are statutory or contractual transaction costs. They still increase the upfront cash requirement and should be budgeted alongside real estate transfer tax.

Can annual property tax be calculated from the purchase price?

Not reliably. The result depends on the model used by the state, the assessed tax bases and the municipality’s multiplier. Use the property’s assessment and the relevant local information.¹⁵

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Conclusion: model the full journey from purchase to sale

A realistic property budget does not stop at the price and mortgage payment:

Initial cash requirement
= purchase price
+ real estate transfer tax
+ notary and land register
+ estate-agent commission, where applicable
+ renovation and furnishing

During ownership, finance, non-recoverable costs, annual property tax and the income-tax effect of letting also matter. For a planned sale, allow for selling costs, ownership period, use of the property and depreciation already claimed.

German Immo Flow uses your inputs to calculate real estate transfer tax, typical ancillary purchase costs, financing figures and pre-tax investment metrics. It does not calculate personal income tax, the amount on a specific property-tax assessment, vacancies, maintenance or transaction-specific legal issues; those require separate review.

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Disclaimer: This article is a simplified general guide based on the position as at 2 August 2026. It is not tax, legal, financing or investment advice. Ask a tax adviser, notary and any other appropriately qualified professional to review your transaction.

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