The Real Estate Transfer Tax in Berlin

In recent years, the Real Estate Transfer Tax (Grunderwerbsteuer) has increased significantly and is now one of the principal sources of income for the federal states (the Länder). The Berlin metropolitan region, for instance, has seen the Grunderwerbsteuer increase from 3.5% to 6% between 2007 and 2014. Similarly, Northrhine Westphalia, the most populous state in Germany with close to 20 million inhabitants, has risen the tax from 3.5% in 2011 to 6.5% in 2015. Only Bavaria has remained at 3.5%.

The Real Estate Transfer Tax (Grunderwerbsteuer, in German) is one of the most important taxes in Germany. It is imposed on all real estate transactions, meaning that every apartment or house sold (privately) is subject to it. It is independent from other real estate taxes like the Grundsteuer, which is the local tax paid every year to the municipality. The Grunderwerbsteuer is owed to the federal states instead of the federal government. It is used to fund public projects like infrastructure, but also support to refugees and displaced people, for instance.

Graph showing the complete costs of a real estate transaction

The Grunderwerbsteuer (Real Estate Transfer Tax) amounts to 6% on top of the property price in Berlin-Brandeburg.

Role in the real estate transaction process

Although there have been scandals of real estate transfer tax avoidance in recent years (for instance in the sale of the Sony Centre in Berlin!) for private persons the payment of the tax is necessary to finalise a real estate transaction. Below are summarised the main steps in the sale of a property in Germany:

    • Offer is made to the current owner
    • Offer is accepted
    • Reservation is made through a real estate broker
    • Contract is drafted by a public notary
    • For two weeks (minimum), the contract is reviewed by both parties
    • Contract is read at the notary’s office and signed
    • Real estate transfer tax (Grunderwerbsteuer) is paid by the buyer to the Länd
    • Notary receives the confirmation and registers the sale in the cadaster  (Grundbucheintrag)
    • Buyer sends the total payment to the seller within 4-6 weeks

It is important to note that as long as the notary has not seen proof that the real estate transfer tax (Grunderwerbsteuer) was paid, he will not finalise the transaction. There are few instances when the tax does not apply. Only some specific circumstances are exempt from the Real Estate Transfer Tax:

    • inheritance cases, where property is transferred solely to one person or partially
    • divorce cases, where a spouses purchases the shares of the other partner
    • family cases, where the buyer is related directly to the seller
    • transformation from joint ownerships to individual ownerships

In the end, the Grunderwerbsteuer is applied by the acquisition of built or unbuilt land –this includes houses, apartments, cottages, as well as buildings. It is important to be aware of the real estate transfer tax when planning a real estate investment in Germany! Find out more about taxes, fiscal considerations and all other things to keep in mind in our GUIDE TO BUYING REAL ESTATE IN BERLIN.

Disclaimer: ADEN Immo provides this content for your information only and has made every reasonable effort to be factually accurate based on our experience as real estate brokers. ADEN Immo disclaims any and all liability for damages incurred directly or indirectly as a result of errors, omissions or discrepancies.

Sources:

https://www.berlin.de/sen/finanzen/steuern/informationen-fuer-steuerzahler-/faq-steuern/artikel.9062.php

http://www.ilp-legal.de/aktuelles1/101-real-estate-transfer-tax-in-germany

https://www.pwc.de/en/steuerberatung/overview-of-the-german-real-estate-transfer-tax-rates.html

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