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How to Buy Property in Germany

A non-complicated process with a twist. Whether you are a successful businessperson who can't spend a day without a good investment or a dreamer who wants to live nearby Disney Castle, Germany fits your tastes in every case.

But how to become a property owner in the land of strict laws and red tape jungles? Worry not, cause today is the day you finally get the secret formula. 

Brick house in Germany (photo: Ibrahim Bifath)
Brick house in Germany (photo: Ibrahim Bifath)

Who can buy and own property in Germany?

A citizen of any country has the right to purchase a home, an apartment, a land plot, or even a warehouse in every federal state of Germany.

A legal entity needs a document from the Chamber of Commerce (Handelskammer) to own the property. The document confirms that the company's activities are legal.

Do I need a realtor?

In Germany, the participation of a realtor in a transaction is optional. You can choose apartments and houses for sale in Germany without help. But foreigners often turn to real estate agencies due to the language barrier and insufficient knowledge of local laws.

A realtor in Germany:

  • Negotiates with the seller.
  • Provides advice on the selection of housing.
  • Resolves issues with banks.

Please note! Real estate activity in Germany is licensed. Therefore, ask if the specialist has a permit to conduct brokerage activities by §34 GewO.

Confirmation of the realtor's professionalism is also his membership in the Association of Brokers in Germany (Verband Deutscher Makler).

Signing a contract of sale is not everything. A notary takes care of the owner's rights and fixes the ownership in the land register.

The notary is a necessary link in buying property in Germany. They will check all aspects of the transaction, after which will apply for changes.

Many people use a notary to arrange the settlements. In this case, the money is transferred to the notary's escrow account (notaranderkonto) and stored until the final steps of the sale.

Find the list of all licensed notaries in Germany on the website of the Federal Notary Chamber.

How easy is it to buy a home in Germany?

The purchasing process takes four simple steps.

Step 1. Open a bank account and check the object

In Germany, you can pay for the transaction from either a German or any other foreign account.

There are no legal obstacles for foreigners to open accounts in German banks, but the buyers' financial past must be clean. You must be present to verify your identity and go through all the formalities.

Foreign clients need a passport, proof of residence address, and correctly filled out bank forms, but some banks may also require a certificate of recommendation.

You may also need a postal address in Germany to forward documents (foreigners often use the realtor's address) and German or English skills at a conversational level. Sometimes the bank asks for income certificates.

You open an account in euros. Money can be deposited into the account immediately after opening.

Checking the object

First, check the land register (Grundbuch). You can do this yourself or with the notary's help. The land register records all present and past owners, possible encumbrances, etc.

The buyer transfers money to the seller only after obtaining the bank's permission to remove encumbrances (Löschungsbewilligung), so the newly-made owner does not risk anything.

If it is not possible, the buyer and the bank conclude an agreement on the payment method of the remaining debt.

Other documents to check are the housing charter (Teilungserklärung), the owners' meetings report (Eigentümerversammlungsprotokolle), the economic plan (Wirtschaftsplan), and the calculation of utilities (Nebenkostenabrechnung).

Step 2. Conclusion of the contract

The seller and the buyer meet at the notary to sign the purchase and sale contract. Both parties or their proxies can certify contracts with various notaries in different cities. The contract comes into force after its legal completion by both parties.

Notarization of the contract of sale by a notary is a mandatory condition of the transaction.

The notary is obliged to read the sale contract aloud and answer any additional questions. After the contract is read and all the points are clarified, the buyer, seller, and notary put their signatures on the document, and everyone receives their certified copies.

Most brokers take a fee either in the amount of 1% of the cost (with German buyers who do not need translation and transaction support) or in the amount of the entire commission (in the case of foreign buyers).

Step 3. Payment of the transaction

There are two options: the payment directly to the seller's account or settlement through a notary's trust account (Notaranderkonto).

The prerequisites for payment include:

  • Pre-registration of property rights in favor of the buyer (Auflassungvormerkung).
  • Obtaining a certificate from the bank on permission to remove encumbrances (Löschungsbewilligung).
  • Obtaining permission from the manager at the house for sale and purchase (Verwalterzustimmung).

Payment using a notary's trust account is used if the parties wish to transfer the property quickly.

After signing the purchase and sale agreement, the notary opens an escrow account specifically for the transaction. The buyer transfers the money within the agreed period (usually two to four weeks).

After paying the entire amount, the keys are transferred to the buyer. Only a notary has access to the trust account.

Step 4. Registration of a new owner

Immediately after signing the contract of sale, the notary sends to the land court (Grundbuchamt) an application for preliminary registration of the buyer as a new owner.

Only after that, the amount is transferred to the seller's or notary's account.

The notary receives the entire amount and sends an application to the land court for the final ownership registration. All entered data is stored in the electronic cadaster (land registry).

Since the final registration procedure may take several weeks, the purchase and sale agreement specifies the date of the economic transfer of ownership rights, from which the buyer assumes all rights and obligations related to the ownership of real estate: accommodation, rental, payment of monthly expenses, etc.

For the convenience of calculations, the economic transfer of ownership rights is usually assigned on the first day of the month following the day after the payment.

What about the mortgage?

There are no official restrictions on obtaining a mortgage loan for foreigners in Germany.

German banks evaluate applications for mortgage loans. It is difficult to obtain a loan for those applicants whose source of income and reliability are difficult to verify.

This category primarily includes foreigners who are not residents of Germany or EU countries.

The maximum amount of mortgage you can count on depends on your status. Residents of Germany can borrow up to 100% of the real estate value. Non-residents get about 50% when applying to the bank for the first loan.

If you have a property in Germany or have already paid at least one mortgage loan here, you can get up to 60-70%.

The main task of the loan applicant is to confirm the solvency.

Among the mandatory requirements:

  • An available bank account that has been regularly used for at least the last two years.
  • Available funds for the initial payment.
  • From 21 to 65 years of age.
  • Income proofs (income certificates for the previous six months, a salary sheet from the place of work, statements of cash flow on accounts for the last two years, etc.).
  • No bad credit history.

The bank secures the purchased property until the mortgage is closed. The lender is interested in protecting itself in case the borrower stops paying, so it also checks the liquidity of the property.

Typical mortgage loan terms

The amount of equity (% of the value of the real estate)

Minimum 40% (for non-residents)

Loan interest rate

The average loan rate in Germany is 1.5%. For non-residents, it most often varies from 2.39% to 4.60%

Maximum term of the loan agreement

35 years

Average loan term

10-20 years

Early repayment

Yes, but if you do not discuss this option with the bank in advance, you will have to pay a fine

What about property taxes?

Regardless of citizenship, any property owner in Germany is obliged to pay property taxes and reimburse utility costs.

Taxes on property ownership

All owners in Germany are subject to the obligation to pay the land tax (Grundsteuer), which is regulated by the Law on Real Estate Taxes (Grundsteuergesetz, GrStG) of December 1, 1936.

The base rate is only 0.35% of the assessed property value. Still, each municipality sets an increasing coefficient that depends on the type of real estate, location, year of construction, and the plot area. Therefore, the average land tax is 1.0–2.8%.

The final amount is relatively low when compared with other EU countries. For example, for an apartment of 70-80 sq.m. in a large city, owners have to pay about €200-250 annually, and €600 for a mansion. The rates are lower in small towns.

If the owner has a residential building, they also pay the land tax. In most cases, the tax should be paid by the property owner. Therefore, the owner distributes the amount of tax to all tenants and sets the frequency of payments.

To make a payment, you can go directly to the tax office, send money by bank transfer to the account of the tax service or pay online through the special portal Elster. 

Tax on the rental of real estate

Depending on the size of the profit, the income tax (Einkommensteuer) is 0-45%.



To €9,000

0% for residents

14% for non-residents

From €9,001 to €13,996


From €13,997 to €54,949


From €54,950 to €260,532


From €260,533


The tax is calculated from the amount after deducting all expenses and depreciation. It is worth saving all the checks to reduce the base when submitting the declaration. As deductible expenses, you can set off:

  • Payment for the management company services
  • Loan interests
  • Utilities
  • The land tax
  • The depreciation (up to 3% per year)
  • Repair costs

The declaration must be submitted once a year before July 31 of the year following the reporting one.

Tax on the sale of real estate

If you sell a property within ten years from the purchase date, you need to pay a speculative tax (Spekulationssteuer).

It is calculated at the income tax rate and paid with the tax on other income for the last year: the profit from the real estate sale is added to other income (salary, rental income, dividends, etc.) and depends on the total amount.

The profit from the sale in the case of a lease is the net difference between the sale value and:

  • All additional acquisition costs (tax on the transfer of ownership rights, notary, lawyer, re-registration, etc.).
  • Expenses for repairs, improvement of housing.
  • Mortgage interest, etc.

The rate varies from 14.77 to 47.475% for individuals, depending on the net profit amount. Legal entities pay this tax at a flat rate of 15.825%.

Features. There is no need to pay sales tax if:

  • You have owned real estate for more than ten years.
  • The property was used only for personal residence in the year of sale and during the previous two years.

Both rules do not apply to legal entities; they pay income tax in any case.

How to save on taxes

Residents regularly resort to the help of tax consultants to compile declarations, as the system is quite complex, while it provides many legal ways to reduce the tax burden. There are tax benefits for families with children, owners who renovate their homes, etc.

We recommend that you plan the transaction structure before buying a property and consider possible savings on taxes. For example, it is more profitable to formalize the ownership of a legal entity and attract bank financing in some cases.

There are certain subtleties regarding tax refunds. If you submit the declaration on time and voluntarily, you can write an application for compensation for the previous four years, and the answer comes within two to six months.

If you file a declaration on time, 0.25% of the amount outstanding is charged for each month of delay. If you are late in paying the tax, the monthly penalty will be 1%: if you have to pay €12,000, then the monthly penalty for not submitting a declaration on time is €30, and €120 per month for an unpaid tax.

What about the additional costs of the purchase?

Not as big as they could have been.

The notary services payment

There is a special table to calculate the notary expenses. On average, one operation obtains about 1.5%. But if the property value is low, the notary fee may be around 2-3%. Conversely, when buying expensive objects, the percentage is below average.

Expenses for registration of a new owner

The cost of registering property rights in the land register is up to 1.0%.

Realtor's commission

The broker's commission is from 3 to 6% + VAT, and in most cases, the buyer pays it.

Sometimes the commission or part of it is charged from the seller and is included in the property price.

In conclusion

  • There are no restrictions on foreigners buying property in Germany.
  • A notary is the crucial link of the transaction, which ensures its purity and security. A transaction cannot be carried out without one.
  • Individuals must pay a speculative tax (Spekulationssteuer) when selling real estate within ten years from the acquisition date, and it is calculated as part of the income tax.
  • The profit from renting in Germany is subject to income tax. The rate varies from 0 to 45% and depends on the amount of profit received.


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