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The prerequisite for a successful purchase

Real estate transfer tax is a tax that is levied once on the purchase of real estate or land. It should not be confused with property tax, which is payable annually and is levied by the respective municipality on the ownership of land. The buyer cannot be entered in the land register as the new owner until the real estate transfer tax has been paid.

Included in the ancillary costs when purchasing real estate

  • Since real estate transfer tax is one of the ancillary costs when purchasing real estate or land, it is advisable to budget for it.

  • Real estate transfer tax cannot be financed by means of bank loans. The amount must be raised by the buyer. For that reason, it is advisable to enquire about the tax rate prior to making a purchase so that you are aware of the approximate amount of real estate transfer tax you will be required to pay when you make the purchase.

What real estate transfer tax is levied on

As a rule, real estate transfer tax does not just relate to the plot, but also includes the price of any existing buildings. Whether this relates to an existing building, a new building or an owner-occupied flat within an apartment building is irrelevant. The only exception to this is developers who purchase real estate that has not yet been developed.

Cases in which no real estate transfer tax is due

Real estate transfer tax does not need to be paid under the following circumstances:

  • Inheritance

  • Gift

  • Sale between first-degree relatives, including parents and children, spouses but not siblings

Time at which the real estate transfer tax falls due

The legal basis for the taxation of legal transactions in connection with the purchasing of real estate is the German Real Estate Transfer Tax Act (GrEStG). A civil-law notary must be appointed to handle the purchase of real estate. He or she is responsible for drawing up the sales contract with the negotiated purchase price. The real estate transfer tax falls due immediately upon the signing of the contract by both parties, i.e. at the time that it is concluded

Who is required to pay

The tax is to be paid by the buyer. The tax office is informed by the notary that the purchase has taken place. It sends a tax assessment, which includes a request for payment, to the buyer, who must pay the corresponding sum within a legally prescribed period of four weeks. The buyer then definitively proves his or her solvency by paying the real estate transfer tax. In return, the tax office issues a so-called clearance certificate, which is sent to the notary. The notary then passes the certificate on to the land registry. Only then will the buyer be entered in the land register . And only then is the purchase actually completed. 

How real estate transfer tax is calculated

Real estate transfer tax is a state tax and the rate you will pay varies by state. It is paid in the federal state in which the real estate was acquired. In addition to the current tax rate for the acquisition of real estate in the respective federal state, the purchase price agreed in the sales contract is also used as a basis for the calculation.

Current real estate transfer tax rates by federal state (as at: August 2019)

  • Baden-Württemberg: 5.0%

  • Bavaria: 3.5%

  • Berlin: 6.0%

  • Brandenburg: 6.5%

  • Bremen: 5.0%

  • Hamburg: 4.5%

  • Hesse: 6.0%

  • Mecklenburg-Western Pomerania: 5.0%

  • Lower Saxony: 5.0%

  • North Rhine-Westphalia: 6.5%

  • Rhineland-Palatinate: 5.0%

  • Saarland: 6.5%

  • Saxony: 3.5%

  • Saxony-Anhalt: 5.0%

  • Schleswig-Holstein: 6.5%

  • Thuringia: 6.5%