Germany operates under a federal system, giving its states considerable self-governing power, so each federal state can set its own tax rates. For an overseas buyer, this means the transaction cost of buying property differs from state to state within Germany. This article shares the transaction costs and expenses of buying property in Germany, including the real estate transfer tax/stamp duty (such as each German state’s RETT rate), agent commission, notary fees, and land registration fees, to make it easier to work out costs before investing.
Real Estate Transfer Tax (Grunderwerbsteuer)
The real estate transfer tax [Real Estate Transfer Tax] applies to all property purchases in Germany. This is a property transfer tax payable to the government when buying real estate in Germany. The tax is calculated on the value of the land and all fixed components of the property (such as an apartment building). Once the sale contract is completed and signed by both buyer and seller, the real estate transfer tax (RETT) becomes payable. Because Germany has not set a single nationwide rate for this tax, the amount differs by state. The assessment basis is the property purchase price stated in the sale contract. For example, real estate transfer tax can make up a significant portion of the transaction cost of buying property in Germany. In Frankfurt (in the state of Hessen), the real estate transfer tax can reach as much as 6.0% of the purchase price. If you wanted to buy an apartment in Frankfurt for €600,000, you would need to pay €36,000 in transfer tax. It is therefore essential to factor this real estate transfer tax into your budget calculations.
Typically, a buyer will receive the German real estate transfer tax assessment 4 to 8 weeks after the purchase contract has been notarized by both parties at the notary’s office. The real estate transfer tax must be paid within one month. If, for whatever reason, this tax is not paid, the land registry will not register the change of ownership for the property.
RETT Rates by German State
RETT rates by German state (as of [confirm date]): Bavaria remains the lowest at 3.5%; several states have changed their rate since this table was first compiled — Saxony and Hamburg raised theirs to around 5% in 2023, and Thuringia lowered its rate to around 5% in 2024. Check the current rate for your state directly with its finance ministry before you budget.
Agent Commission
Most property transactions in Germany involve a real estate agent (Immobilienmakler), which buyers and sellers are free to use or not. Once a real estate agent provides their services, though, they will charge a commission to either the buyer or the seller. In the past, this was freely negotiated between buyer and seller, but a new law effective December 23, 2020 requires that agent commission be split equally between buyer and seller. If the buyer engaged the agent, the seller must also pay a share of that agent’s commission, and vice versa. If both buyer and seller each engaged their own agent, each side pays half of the other side’s agent’s commission. The only exception is when the buyer is a legal entity rather than a natural person, in which case the old rule applies and buyer and seller negotiate freely between themselves. The contract between a real estate agent and the buyer/seller must now also be in writing — a verbal agreement or a simple handshake deal is a thing of the past: under the new law, at minimum a written email is required. The agent fee figures set out by each German state are only suggested amounts and remain negotiable.
In most cases, a real estate agent’s fee is 3%-7% of the transaction price, plus VAT. In Berlin, the most common commission is 3%, plus 19% VAT (in German, “Mehrwertsteuer,” abbreviated MWSt), bringing the total to around 3.57% of the transaction price. Assuming both buyer and seller each engaged an agent, and the transaction price is €50,000, the agent’s commission would be €1,785. As with most property-purchase costs, agent commission is paid after the purchase contract is signed. It is usually paid within one to three weeks of receiving the agent’s invoice.
Notary Fees
A property purchase in Germany is handled by a third-party notary, who is responsible for drafting the sale contract, as well as handling the notarization and explanation of the signing. The notary must also forward the relevant documents and information to the authorities concerned, including the land registry and the tax office, so the buyer can register the property. This also carries a service fee, and notarial service fees are typically 1.5%-2% of the transaction price, varying by state.
Land Registration Fee
Germany’s current land registration system is managed and recorded by the local government’s land office, so when a transaction takes place, the buyer must register with the local land office, and the land office charges a service fee of around 0.5%-1.5% of the transaction price. The buyer needs to pay this fee before the entire transaction is fully complete.
Taken together, the transaction cost of buying property in Germany depends on the state where the property is located, and agent commission can be negotiated — there is no fixed rate. We recommend raising any request regarding agent commission before the transaction takes place, rather than afterward, to avoid disputes that could affect the deal.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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