What taxes will I pay when buying property in Germany? Complete Guide 2025
Buying property in Germany is not only a profitable investment but also a financial commitment that involves taxes and fees. Potential investors and buyers often ask the question:
“How much tax will I pay when buying property in Germany?”
In this article, we provide a complete breakdown of all the taxes, duties, and mandatory expenses when buying residential or commercial property in Germany, including specifics for foreigners.
Main tax when buying property: Grunderwerbsteuer (Property Transfer Tax)
This is the main and mandatory tax that you will pay after signing the sales contract.
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Rate: From 3.5% to 6.5% of the property's value
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Depends on the federal state (Bundesland)
Current rates in different regions of Germany (as of 2025):
| Federal State | Grunderwerbsteuer Rate |
|---|---|
| Bavaria (Bayern) | 3.5% |
| Saxony (Sachsen) | 3.5% |
| Berlin (Berlin) | 6.0% |
| Brandenburg | 6.5% |
| North Rhine-Westphalia (NRW) | 6.5% |
| Hamburg | 5.5% |
Example:
When buying an apartment in Berlin for €500,000, you will pay:
€500,000 × 6% = €30,000 tax
Who pays the tax — the buyer or the seller?
In 95% of cases, the buyer pays the tax unless otherwise stated in the contract. This is the standard practice in the German market.
Additional mandatory expenses
Although these are not taxes in the strict sense, it is important to consider the mandatory state fees associated with the transaction:
1. Notary Services (Notar)
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Rate: ~1–1.5% of the property value
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The notary drafts the contract, submits documents to the land registry, and is an essential party to the transaction
2. Registration in the Land Book (Grundbuchamt)
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Rate: ~0.5% of the property value
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Without registration, you do not become the legal owner
3. Legal Support (optional)
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Rate: ~0.5–1% — when hiring a lawyer
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Particularly important when dealing with foreigners or purchasing through a GmbH
Annual taxes after the purchase
After purchasing property in Germany, you will pay the following:
1. Grundsteuer (Property Tax)
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Annual tax, dependent on the cadastral value and municipal coefficients
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On average: €200–€800 per year for residential property
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Since 2025, a reform has been introduced, making the calculation individual for each property
2. Income Tax on Rent (if you rent it out)
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From 14% to 45%, depending on the income
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Deductions for expenses are possible (repairs, maintenance, mortgage interest)
3. Capital Gains Tax (Spekulationssteuer)
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If you sell the property before 10 years of ownership, you may be subject to a tax on the profit from price increase
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You are exempt from tax if you have owned it for more than 10 years or lived in the property yourself
Taxes for foreign nationals: are there any differences?
No. Foreign nationals pay the same taxes as residents of Germany.
But it is important to:
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Register in time as a taxpayer (Steuernummer)
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Submit tax returns (especially for rental income)
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Avoid double taxation (if your country has an agreement with Germany)
FAQ: Frequently Asked Questions
Do I have to pay tax if I buy property as a legal entity?
Yes, legal entities pay the Grunderwerbsteuer just like individuals.
Can I reduce the amount of tax?
No. The tax is based on the full value stated in the contract. Underestimating the value can lead to criminal liability.
What happens if I don't pay the tax on time?
The transaction will not be registered in the Grundbuch, and you will not become the official owner.
