German Mortgage

How much are real estate purchase fees in Germany?

When you buy property in Germany, you will want to plan to pay real estate purchase fees. Now, what are real estate purchase fees exactly? These fees usually include: real estate transfer tax, notary fees, land register fees and any brokerage commissions.

Importantly, these fees do not include the cost of the property itself. In Germany, purchase fees may amount to up to 15% of the property’s purchase price (see table below).

State Real Estate Tax Real Estate Agent fee Notary costs Total
Baden-Württemberg 5,00% 3,57% 2,00% 10,57%
Bayern 3,50% 3,57% 2,00% 9,07%
Berlin 6,00% 7,14% 2,00% 15,14%
Brandenburg 6,50% 7,14% 2,00% 15,64%
Bremen 5,00% 5,95% 2,00% 12,95%
Hamburg 4,50% 6,25% 2,00% 12,75%
Hessen 6,00% 5,95% 2,00% 13,95%
Mecklenburg-Vorpommern 5,00% 3,57% 2,00% 10,57%
Niedersachsen 5,00% 3,57% 2,00% 10,57%
Nordrhein-Westfalen 6,50% 3,57% 2,00% 12,07%
Rheinland-Pfalz 5,00% 3,57% 2,00% 10,57%
Saarland 6,50% 3,57% 2,00% 12,07%
Sachsen 3,50% 3,57% 2,00% 9,07%
Sachsen-Anhalt 5,00% 3,57% 2,00% 10,57%
Schleswig-Holstein 6,50% 3,57% 2,00% 12,07%
Thüringen 6,50% 3,57% 2,00% 12,07%

Real estate transfer tax: 3.5% – 6.5% of the purchase price

First, the real estate transfer tax applies to all property purchases. You can calculate the real estate transfer tax from the value of the land and all immobile parts of the property, like buildings. So, once the purchase contract for a property is complete, this tax applies.

Since Germany does not uniformly regulate the amount of real estate tax nationwide, the amount varies from state-to-state. The basis for the assessment is the purchase price of the property as it appears in the purchase contract.

Normally, buyers will receive a real estate tax assessment four to eight weeks after the purchase contract is certified. Once you know how much to pay, you will want to act quickly. The tax must be paid within one month. If for whatever reason you do not pay this tax, the land register will not list the property as belonging to you.

Notary and land register fees: 2.0% of the purchase price

Along with the real estate transfer tax, you also will need to pay notary and land register fees. In Germany, all real estate purchase contracts must pass through a notary. The notary not only certifies that the property is available to sell, but also draws up the purchase contract itself. And, once the contract is signed, the notary must also forward relevant documents and information to the proper authorities (like the Land Register and Tax Office).

Additionally, some purchases require more notary services than others. For instance, the notary may need to settle the purchase price payment via a notary account, or create and register a mortgage for real estate financing. Altogether, these services can add up to 2.0% of the purchase price.

Brokerage fees: 3.5 – 8% of the purchase price

In contrast to a notary, using a broker can be optional (although usually a good idea). If you use a broker’s advice or services, they usually require a commission payment. Since the brokerage commission is not regulated by law, the buyer and broker can freely negotiate the amount within a certain framework. However, conditions to this agreement can vary by region, current market situation and the property in question.

Generally, brokerage fees range from 3% to 7% of the purchase price, plus VAT. The brokerage commission, like the majority of real estate purchase fees, is due upon the signing of the purchase contract. Usually, the terms of payment allow one to three weeks after receipt of the brokerage bill.

Additional costs

In addition to the above, you may also need to anticipate other incidental real estate purchase fees. For instance, most buyers can plan for the costs of consultations and inspections, along with potential travel and days off. Normally, buyers hire an expert to examine the property before they purchase. You may also want to hire an expert who can oversee and reduce construction and renovation costs.

While hourly rates are fine, try to hire at a flat rate. Ultimately, a flat rate is usually cheaper. Be sure to speak with your developer and real estate agent about any inspections as well. Some provide excellent customer service and will actually pay for an independent appraisal, like one by the TÜV or other recognised expert.

Financing additional labor costs

As you can see, real estate purchase fees quickly add up when you are buying a property. Plan a budget for any labor costs from the beginning to avoid unwanted surprises. Since labor costs do not increase the value of the real estate, they do not increase the value of the mortgaged property. For this reason, lenders do not generally finance these items. So, you will need to have enough equity to pay out-of-pocket.

Tax credits for incidental real estate purchase fees

Clearly, all of the purchase-related costs mentioned above can significantly raise the overall cost of a property. The good news is that in some cases these expenses may be eligible for tax credits.

First, anyone who uses or rents their property commercially can claim real estate purchase costs for tax purposes. Normally, you will apportion these costs proportionally within the scope of standard depreciation (depreciation for wear and tear).

Second, tax credits can also apply to restorations or historical real estate purchases. In such cases, the purchase price usually breaks down into three parts: the land, the old, original building and restoration and modernisation costs. Then, purchase-related costs for tax purposes also divide into these three categories.

As an example of tax credits, you may be able to write off the percentage of the purchase cost allotted to the ratio of restoration and modernisation costs to the total purchase price in just 12 years. For the rest of the additional costs, depreciation will play out in accordance with standard depreciation over 40 or 50 years.

Already found a property and now you’d like to know the purchase fees and total costs. The LoanLink mortgage Illustration shoes all components.

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