Wondering how much it actually costs to purchase a house or an apartment in Germany? On top of the obvious property purchase price, you should also factor in closing costs when buying a home in Germany.
The closing costs of buying a home in Germany include: real estate transfer tax/stamp duty, notary fees, land register fees and any real estate agent fees. Usually, purchase fees are between 5-15% of the property price. This guide will help you figure out the true costs of buying property in Germany and allow you to plan your budget ahead.
The closing costs of buying a house or apartment do not include the cost of the property itself. Similar to down payment, unless you’re a permanent German resident, closing costs should be covered by the buyer’s own equity instead of a bank loan. In Germany, depending on the location of the property, the real estate closing fees may amount up to 15% of the property’s purchase price (see the graph below).
Real estate transfer tax/stamp duty: 3.5% – 6.5% of the purchase price
First, the real estate transfer tax/stamp duty (Grunderwerbsteuer) applies to all property purchases. This property transfer tax that you need to pay to the government when buying a real estate property in Germany. You can calculate the real estate transfer tax from the value of the land and all immobile parts of the property, like apartment buildings. So, once the purchase contract for a property is completed and signed by both property buyer and seller, 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. The real estate transfer tax can possibly account for a big chunk of the closing costs of buying a house or apartment in Germany, for instance. In the state of Hessen, real estate transfer tax could cost up to 6.0% of the property purchase price. If you want to buy an apartment in Frankfurt for 600,000€, you would need to pay 36,000€ for stamp duty. Therefore, it's important to take this real estate transfer tax into account when calculating your budget.
Normally, buyers will receive a German stamp duty assessment four to eight weeks after the purchase contract is certified by the property seller and buyer at the notary appointment. Once you know how much to pay, you need to act quickly. The stamp duty 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 fees and land register fees: 2.0% of the purchase price
To complete the property purchase process, it is mandatory that buyer and seller must hire a notary or solicitor to handle the legal work of buying a home in Germany, which is also known as conveyancing. In Germany, all real estate purchase require paying this notary fees (or conveyancing fees) and land register fees to cover the costs of all the legal paperwork associated with purchasing a real estate property. The notary not only certifies that the property is available to sell, but he or she also draws up the real estate purchase contract (Kaufvertrag). And, once the contract is signed, the notary must also forward relevant documents and information to the authorities, including the Land Register and Tax Office, in order to register the property under your name.
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 (Notaranderkonto), or create and register a mortgage for real estate financing. Altogether, notary fees in Germany can add up to 2.0% of the property purchase price. The conveyancing fee (or solicitors fee) is usually due immediately and the first reminder generally comes after four weeks if you haven’t made the payment to the notary.
Real estate agent fees: 3.5 – 8% of the purchase price
In most cases, the costs involved in buying a home in Germany also includes the real estate agent fees. Contrary to a notary, using a real estate broker (Immobilienmakler) can be optional. If you use service from a real estate agency, they usually charge you a commission fee. Since the real estate brokerage commission is not regulated by law, the buyer and broker can freely negotiate the amount within a certain framework, and decide whether real estate broker fee will be paid either by the property buyer or the seller, or split between the two parties. However, conditions to this agreement can vary by region, current market situation and the property in question. Take buying property in Berlin as an example, it is usually the buyer who pays the real estate agent fees. While this is not always the case, it is important to always ask the real estate agents on the first touch point to avoid any misunderstanding.
Generally, brokerage fees range from 3% to 7% of the purchase price, plus VAT. For example, if you want to buy a house in Hamburg, the real estate agent fees generally costs 6.25% of the property purchase price. So assuming the house costs 800.000€, you would need to pay 50.000€ for the real estate agent fees. 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.
In most cases, you would not need to pay the real estate agent fees if you buy a new house or an apartment directly from a developer. And if you want to look for new built houses or apartments, you can check out neubau kompass, as they exclusively offer real estate listings directly from developers.
Below is an example of the breakdown of total closing costs if you are buying a 500.000€ property in Berlin.