The purchase price is just the beginning
Germany is one of Europe’s largest property markets, attracting both domestic and international investors with its stable economy and strong rental demand. But the headline purchase price tells only part of the story.
Between Grunderwerbsteuer (transfer tax), notary fees, land registry charges, and agent commission, the upfront extras — collectively known as Kaufnebenkosten — typically add 8-12% on top of the purchase price depending on which state you buy in. Ongoing costs and a capital gains tax regime that rewards patience further shape your returns. Here is exactly what to expect.
Grunderwerbsteuer (Transfer Tax)
Germany’s property transfer tax — Grunderwerbsteuer — is a flat-rate tax set independently by each of the 16 Bundeslaender (federal states). There are no progressive brackets, no foreign buyer surcharges, and no first-time buyer relief. The same rate applies to residential and commercial property alike.
Current rates by state (2026):
| State | Rate |
|---|---|
| Bayern (Bavaria) | 3.5% |
| Baden-Wuerttemberg | 5.0% |
| Niedersachsen (Lower Saxony) | 5.0% |
| Rheinland-Pfalz | 5.0% |
| Sachsen-Anhalt | 5.0% |
| Thueringen (Thuringia) | 5.0% |
| Bremen | 5.5% |
| Hamburg | 5.5% |
| Sachsen (Saxony) | 5.5% |
| Berlin | 6.0% |
| Hessen | 6.0% |
| Mecklenburg-Vorpommern | 6.0% |
| Brandenburg | 6.5% |
| Nordrhein-Westfalen (NRW) | 6.5% |
| Saarland | 6.5% |
| Schleswig-Holstein | 6.5% |
The difference is significant. On a EUR 300,000 property, Grunderwerbsteuer ranges from EUR 10,500 in Bayern to EUR 19,500 in Brandenburg or NRW — a spread of EUR 9,000 just from the state you buy in.
Bayern has maintained the lowest rate in Germany at 3.5% and has never raised it. Several states have increased their rates in recent years: Sachsen jumped from 3.5% to 5.5% in 2023, Hamburg from 4.5% to 5.5% in 2023, and Bremen from 5.0% to 5.5% in July 2025. Thueringen went the other direction, dropping from 6.5% to 5.0% in 2024.
Closing costs
Beyond Grunderwerbsteuer, buyers pay the following:
- Notary Fees (Notarkosten): Regulated by federal law (Gerichts- und Notarkostengesetz). The notary handles the purchase contract, escrow account, and coordinates with the land registry. Fee is based on the purchase price on a sliding scale, typically ~1.5% for mid-market properties. Includes 19% MwSt.
- Land Registry (Grundbucheintragung): Fee for recording the new ownership in the Grundbuch (land register). Regulated fee, typically ~0.5% of the purchase price.
- Agent Commission (Maklerprovision): Since December 2020, residential agent commission must be split equally between buyer and seller. Total commission is typically 5.95-7.14% (including 19% MwSt). The buyer’s share is ~3.57%. The mandatory split applies to apartments and single-family houses — commercial properties are exempt.
If you are financing with a mortgage, there are additional costs:
- Mortgage Registration (Grundschuldeintragung): Fee for registering the mortgage lien (Grundschuld) in the land registry. Approximately 0.4% of the loan amount.
- Notary Fees on Mortgage Deed: Separate notary fee for the mortgage deed (Grundschuldbestellungsurkunde). Approximately 0.5% of the loan amount.
- Property Valuation (Wertgutachten): Independent valuation required by the bank for mortgage approval. Typically EUR 300-600.
Total Kaufnebenkosten (all upfront costs excluding the purchase price) typically run 8-12% depending on the state and whether you use an agent and mortgage. In a high-tax state like NRW or Brandenburg with full agent commission and a mortgage, you can easily exceed 12%.
Ongoing costs
Annual holding costs for German investment property:
- Property Tax (Grundsteuer): Overhauled in the 2025 reform. Calculated as assessed value (Grundsteuerwert) x assessment rate x municipal multiplier (Hebesatz). Varies enormously by municipality — typical range is EUR 300-1,500/year for mid-market residential. Paid quarterly. Landlords cannot pass Grundsteuer to tenants since 2023.
- Building Insurance (Wohngebaeudeversicherung): Structural insurance covering fire, storm, water, and natural hazards. Typically EUR 120-150/year for an apartment, EUR 250-500/year for a house. Additional Elementarschadenversicherung for flood and earthquake is recommended.
- Landlord Liability Insurance (Haus- und Grundbesitzerhaftpflicht): Covers liability for injuries or damage on your property. Typically EUR 50-150/year.
- Maintenance Reserve (Instandhaltungsruecklage): Rule of thumb: EUR 7-12 per sqm/year, or roughly 1% of property value per year. Budget approximately EUR 3,000/year for a typical property.
- Hausgeld (Apartment Service Charges): For apartments only. Monthly charges covering building insurance, maintenance reserve, cleaning, management, and communal utilities. Typically EUR 2.50-4.00 per sqm/month (EUR 200-300/month for a 75 sqm apartment).
Annual holding costs for a house total approximately EUR 4,200. For an apartment, the Hausgeld replaces some individual items but adds its own costs, bringing the total to approximately EUR 5,000-7,000/year depending on the building.
Capital gains tax (Spekulationssteuer)
Germany’s capital gains tax on property — known as Spekulationssteuer — has one headline feature that every investor should know: after 10 years of ownership, the gain is fully exempt for private individuals.
Within the 10-year speculation period (Spekulationsfrist), gains are added to your taxable income and taxed at your personal income tax rate:
| Taxable income bracket | Rate |
|---|---|
| Lower income | 25% |
| Mid-range | 35% |
| Higher income | 42% |
| Top bracket (>EUR 277K) | 45% |
On top of the income tax rate, add Solidaritaetszuschlag (5.5% of income tax) and optionally Kirchensteuer (8-9% of income tax). The effective combined maximum rate can reach approximately 47.5%.
After 10 years: The gain is 100% exempt. No tax, no reporting requirement. This makes Germany one of the most attractive markets in Europe for long-term property investors.
Primary residence exemption: If you lived in the property for the year of sale and the two preceding calendar years, the gain is fully exempt — no need to wait 10 years.
Corporate ownership (GmbH): No speculation period benefit. Gains are taxed at the corporate tax rate of approximately 30% (Koerperschaftsteuer 15% + Solidaritaetszuschlag + Gewerbesteuer ~14%), regardless of holding period.
Three-property rule: If you sell more than three properties within five years, the tax office may reclassify you as a commercial property dealer (gewerblicher Grundstueckshandel), subjecting all gains to trade tax.
When selling, expect to pay an agent commission of ~3-3.57% (seller’s share including 19% MwSt) and approximately EUR 500 for mortgage cancellation (Grundschuldloeschung) if applicable. An Energieausweis (energy certificate) is mandatory when selling and costs EUR 50-300.
What does this mean in practice?
For a EUR 300,000 investment apartment in Berlin with a 20% deposit:
Upfront costs:
- Deposit: EUR 60,000
- Grunderwerbsteuer (6.0% — Berlin): EUR 18,000
- Notary fees (~1.5%): EUR 4,500
- Land registry (~0.5%): EUR 1,500
- Agent commission (~3.57%): EUR 10,710
- Mortgage registration (0.4% of EUR 240,000): EUR 960
- Mortgage notary (0.5% of EUR 240,000): EUR 1,200
- Property valuation: EUR 450
- Total cash needed: approximately EUR 97,320
Annual holding costs:
- Grundsteuer: EUR 800
- Building insurance: EUR 300
- Landlord liability insurance: EUR 100
- Maintenance reserve: EUR 3,000
- Hausgeld: EUR 3,000 (EUR 250/month)
- Total: EUR 7,200/year (approximately EUR 600/month)
Mortgage (EUR 240,000 at 3.5% over 25 years):
- Monthly payment: approximately EUR 1,200
To cover monthly costs, you would need rent of at least EUR 1,800 per month. Berlin rents have risen sharply in recent years, and a well-located apartment in this price range can achieve this, though rent control (Mietpreisbremse) limits what you can charge in many neighbourhoods.
The 10-year exemption fundamentally shapes the investment strategy. If you hold for a decade, you pay zero capital gains tax on what could be a substantial gain. With moderate appreciation of around 3%, a EUR 300,000 property could be worth approximately EUR 403,000 after 10 years — and the EUR 103,000 gain would be entirely tax-free. This makes Germany a market where buy-and-hold investors have a clear structural advantage.
Run the numbers for your property
Use our German property ROI calculator to model the full picture — Grunderwerbsteuer by state, notary fees, mortgage payments, rental income, and projected capital growth with the 10-year exemption. For a step-by-step overview of the buying process, read our guide to buying property in Germany.