The real estate market in Berlin appears to be in full bloom. Over the past decade, property prices have doubled and the urban population is growing every year. If you already own an apartment in Berlin, there are situations in which you may have to move out: an addition to the family, for instance, or the need to relocate for work. So the question will quickly arise: should you sell your Berlin apartment or rent it out?

Doing two things at once is always a complicated adventure, especially for real estate investments. Keeping your previous home might seem profitable on the long run. But it also represent a commitment in time and money that you must be ready to deal with. Before taking any decisions, you should do some serious planning and consider all the elements. ADEN Immo walks you through a list of questions to determine if you should sell your Berlin apartment or rent it out. Remember: as with most real estate questions, these are not universally “right or wrong”! Once you understand the options and the current real estate market in Berlin, you can make the best choice for your situation.

Will the property produce a monthly profit or a loss?

The first element in deciding whether to rent out your apartment or sell it, is to make a financial estimation of the monthly outcome. You want to have a realistic idea of how much is left from the rental income after you deduct all of the expenses associated with it. Remember to add both running expenses and exceptional ones. Think about upcoming renovations in the building, also known as capital expenses!

Below is a list of all the common monthly costs endured by a landlord in Berlin:

  • Mortgage: what are your monthly repayments, and how long will it take before the total credit is reimbursed to your financial institution? Beware of the moment when your interest rates are being re-calculated after the Zinsenbindung. Take a look at our article on the mortgage system in Germany.
  • Taxes: all properties in Germany are subject to local land tax (Grundsteuer) which can be included in the rent. Real estate transactions are also subject to a number of punctual taxes. Take a look at our complete guide on the fiscality of real estate in Berlin.
  • Utilities: most utilities are reflected in the rent and therefore are covered by the tenants, such as heating costs, water supply, wastewater, garbage collection, street cleaning, etc.
  • Insurance: in Germany, all properties are required to be covered for fire insurance, but there are additional ones you can get (floods, water damages, theft, etc.).
  • Building management: usually accomplished by the Hausverwaltung (homeowner assocation)
  • Vacancy: in your calculations, keep in mind that between tenants your apartment may not be rented at all time. In Berlin, apartments can legally be left empty with no long-term lease for 3 months. Longer periods incur penalties.
  • Repairs: you might need to fix some things in the apartment, like water systems, floors and windows. These expenses are the responsibility of the owner. Keep them in mind when considering how much money you invest in your Berlin apartment!
  • Capital expenditure: houses and city buildings alike need frequent repairs, which can create large expenses for landlords. For instance, a facade renovation or a new roof can quickly add up in 6-figure bills. So it is important that you understand the way your building is managed (monthly deposits into a collective fund called the Rücklage, or punctual calls for cash called the Sonderzahlung). Take a look at the Guide to being a landlord in Berlin

Compile all these numbers in an excel file, and deduct them from your rental income. What you are looking for is a positive cash flow where the property produces a profit every month. It’s important to have all the elements in mind! Forgetting something –like capital expenditures– can prove to be disastrous for your finances. For instance, you think that your cash flow (profit) is going to be €2,000 per year. However, in two years you need to contribute a €5,000 sum to the co-property to renovate the roof… That’s not such a good deal, is it?

How much should you charge for rent?

In Berlin rents tend to be quite low. Discover more in our guide to Berlin real estate prices and trends in 2018. Keep in mind that there is a rental index, called the Mietspiegel, which determines what the rent of each property should be: you can calculate it online on the official website of the city of Berlin. And recently, a rental brake law was passed, the Mieterpreisbremse which curbs rent prices. Below is the Berliner Mietmap which shows, according to data collected in 2015 from online listings of apartments for rent in Berlin:

Average rental prices (Kaltmiete) in Berlin, organised by metro station.
Source: Immobilien Scout 24

What would your Return on Investment (ROI) be?

The next question is: how much would you profit if you sold your Berlin apartment today? Remember that most transaction costs (agent fees, taxes and notary costs) are at the charge of the buyer. So it is likely that you will make a profit from the sale compared to your initial investment, especially since real estate prices have been rising in Berlin. But would it be better to keep the apartment and rent it out? Rental prices are quite low in Berlin and there are many other types of investments that yield higher returns. For more information on Return on Investment from real estate, check out this guide to Analyzing Rental Properties.

Average real estate sale prices in the greater Berlin area (2017).
Source: Statistischen Landesamtes

Consider the Capital Gains Tax exemption

Property prices are increasing every year all across Germany, especially in urban areas in the past decade. Therefore, it is possible that the sale of real estate will generate extra income: this is called capital gains. Under what conditions is a capital gains tax levied in Germany for residential properties like your Berlin apartment?
If the apartment was your main residence for two complete calendar years (January to December), the profits will be exempt from capital gains tax.
Properties that have been owned for over 10 years are exempt from capital gains tax.
For all other cases, the capital gains are taxed as additional income.

Remember that ADEN Immo is not a tax advisor and provides this article for your information only. It is based on our experience as real estate brokers in Berlin, and may contain errors and omissions.

Are you willing to be a landlord?

Some tenants are easy to manage… But in other situations, renting out your Berlin apartment means significant time and patience to deal with. Aside from paying the rent on time, other problems can be created from the poor behavior of some tenants –disturbing neighbours, trashing your apartment, and much more. The internet is full of stories about “crazy tenants”! Of course, this is exceptional, but still something to be aware of. More in our Guide to being a landlord in Berlin.

Selling your Berlin apartment while it is occupied by a tenant: the discounted price

Furthermore, be aware that German law is very protective of tenants. Most rental contracts are signed for an unlimited duration (unbefristet). Once this is set, there are very few conditions under which you can legally ask a tenant to leave if you want to sell your apartment after a few years. Find out more about how to terminate a rental contract in our Guide to being a landlord in Berlin.

Most people on the Berlin real estate market are looking for empty apartments, precisely for that reason. They want to move into their own flat, quite naturally, instead of having to deal with asking the current tenant to leave. So in the end, those who willing to buy an already occupied apartments are investors looking for a good deal. They are looking for higher returns on their investment, and so they will only offer discounted prices for your apartment.

ADEN Immo has observed that, on average, an apartment sold while there is already a tenant are usually priced 30% lower than an equivalent property.

If you want to leave your current apartment and buy a larger one, for instance, that will accommodate your family, you should consider selling your apartment now instead of renting it out. It is likely that the returns from rental income will be quite low, and once you have tenants in your apartment, you may not have the same sale opportunity before long!

Real estate taxes in Germany

Properties located on German territory are submitted yearly to the German tax regime. Even if the owners reside abroad, they must pay local taxes and figure out what taxes they will have to pay when selling a property in Germany. So what should you know about the capital gains tax in Germany? ADEN Immo walks you through a quick overview of the German real estate tax system.

Keep in mind that fiscal law for real estate is changing quickly in Berlin. The city is growing fast and the government is trying to minimise speculation. This article is a general overview of the capital gains tax in Germany. It is based on ADEN Immo’s experience as real brokers but we are not responsible for any mistakes, omissions or modifications. Please consult the publications of the Berliner Senate or a tax advisor for detailed information.

Buying a property: real estate transfer tax and registration

When a real estate transaction is completed, the buyer usually has to cover about 15% on top of the property price in fees and taxes. These include: the broker fees (7.14% with tax), the public notary fees (0.5%), the costs for registering to the cadaster (1%), and the real estate transfer tax (Grunderwerbsteuer, also known internationally as RETT for Real Estate Transfer Tax). The amount for the Grunderwerbsteuer varies according to the federal state and the city where the property is located. Berlin, for instance, charges 6.5% of the property value while in Bavaria the rate is 3.5%. There is also a fee for registering the transaction in the city’s cadasters, called the Grundbucheintrag, which is to be paid to the public notary directly. The remaining side costs come from the notary and the broker fees: find out more details in our COMPLETE GUIDE TO BUYING A PROPERTY AS A FOREIGNER (PDF). These two taxes are one-time fees to be paid at the moment of the transaction. But the owner also also has to cover an annual tax, the Grundsteuer.

Municipal real estate tax: the Grundsteuer

In Germany, real estate taxes are paid to the municipality, and calculated on an annual basis (although they are usually paid every trimester). The basis for calculating the tax rate remains complicated and actually still depends whether the property is located in former West and former East Germany: an unbalanced tax system which is under scrutiny and is likely to change soon. Still, the real estate tax is quite low. There are very few circumstances under which it would be exonerated. For a standard flat in Berlin, real estate taxes would average between 80 to 150 euros annually, depending on the location and the size of the apartment. Income generated from renting a property is also subject to income taxation. Find out more in our COMPLETE GUIDE TO GERMAN REAL ESTATE TAXES.

Capital gains tax

Property prices are increasing every year all across Germany, especially in urban areas in the past decade. Therefore, it is likely that the sale of real estate will generate extra income: this is called capital gains. Under what conditions should you expect a capital gains tax in Germany? This brief guide will only look at the case of residential properties owned by private individuals.

  • Firstly, the profit from the sale of private real estate that was the main residence of the owner for two complete years (January to December) is exempt from capital gains tax.
  • Secondly, the profit from the sale of private real estate that was held for ten complete years is exempt of capital gains.
  • In all other cases, the profit between the sales price and the acquisition price is considered to be part of your income in the fiscal year in which the property is sold (more precisely, when the buyer pays the purchase price). So, for an apartment that was bought for €100,000 in 2010 and sold for €150,000 in 2015, the capital gains will be of €50,000. This is a rough example, since there are many costs related to the acquisition and improvement of the property that can be deducted from the calculation (for instance, broker and notary fees).

The profit is then considered to be part of your income in the fiscal year in which the German property is sold, more precisely in which the buyer pays the purchase price

In the end, real estate continues to be exempt from capital gains tax if it has been held for more than ten years. However, in 2009, Germany introduced a very strict capital gains tax for financial products: shares, funds, certificates, etc. called the Abgeltungsteuer. Will the German tax system be advantageous for you?


Selling property in Berlin: what you should know

The real estate market in Berlin is in full bloom: over the past decade, property prices have doubled and the population keeps growing. So what should you know before selling a property in Berlin? How can you improve your chances of a good transaction? How can a real estate broker (a Makler, in German) help you sell an apartment in Germany? Will you even need one? Here are the five key points to best sell an apartment in Berlin:

  1. Evaluate your property correctly
  2. Show your apartment at its best through home staging
  3. Understand the role played by real estate agents if you are selling on your own
  4. Negotiate your relationship with buyers and assess their offers

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.

Evaluating your property correctly

Determining the right sale price of a property is not rocket science. There are some obvious criteria: size, location, amenities, general state of the apartment and building… Looking for similar properties online is also a good idea, but it might not indicate what the final sale price was. So doing your research is important to estimate the value of your apartment, but keep in mind that you might not have access to all the information. It is a good idea to get several real estate agents to evaluate your property. At ADEN Immo, each agent has usually sold at least 100 properties in the past, and they will have an understanding of potential buyers’ interests.


Selling a property… when there is already a tenant renting the apartment

In Germany, tenants have the right to stay in your flat even if you decide to sell it. If they have an open contract (the most standard contract in Germany, called unbefristet), there are few obligations for them to actually leave if they have not breached the rental contract.

Most people on the Berlin real estate market are likely to want an empty flat in order to move in themselves, or have their close relatives live in. Therefore, apartments that are already occupied are seen as less attractive and usually sold at a lower price on the market. Indeed, only a small investor who has no intention of reclaiming the apartment would be interested. ADEN Immo has observed that occupied flats usually sell for about 30% less than similar empty apartments. Want to know more about this topic? Read our article Should you sell or rent out your apartment?

Showing your apartment at its best

A new layer of paint, an extensive scrub, some wax on those nice hardwood floors, a different pair of curtains can go a long way! Even before showing your property to a real estate agent, be sure to freshen up your property to make a good impression on the agent.

Home staging: a clean and tidy apartment will attract better buyers!

Home staging: a clean and tidy apartment will attract better buyers!



Choosing a real estate agent

If you have had several agents estimating your property value, the highest price might not mean the best sale transaction. An overpriced property will receive fewer visits, and with no serious offers arriving in time, you could get tempted to devalue rapidly and end up selling your apartment for less than you could have. The best time frame for a property transaction is one to two months. In big cities, the market is always dynamic, but know that the spring season is usually when there are the most buyers looking for properties in Germany!

Home staging: making your apartment more attractive

Keep in mind that buying real estate is not like buying financial stock: you only need one serious buyer. The decisions of buyer are not necessarily rational: there is a strong emotional element in choosing one’s next home! This means people can be willing to pay above-market rates for a specific feature in the apartment. However, they might be disinterested by a flat that isn’t well presented to them. Therefore, to best sell your apartment, make sure that it looks clean, fresh and taken care of. You might want to remove some furniture, renovate the bathroom floor at low costs, and decorate the living room in a way that will appeal to the buyers. The real estate agent can help you with these small but crucial adjustments.

Home staging is a crucial part of a successful sale in real estate.

Home staging is a crucial part of a successful sale in real estate.


Organising visits to sell an apartment

The best time to show your property is during daylight: buyers will get a good impression of the brightness. If this is difficult for you because of your job, you can rely on a real estate broker to organise visits when you can’t. Furthermore, the agent will also act as an intermediary with the visitors, in charge of understanding their background and their financial plan. Maklers, as they are known in German, act as neutral professionals to help make a good transaction.

Getting offers from buyers

How to find a serious buyer? Many people who check websites like Immoscout or Immonet don’t actually have a real investment plan! According to a recent survey, for instance, more than 60% of French people on real estate platforms have no intention of buying a property. This means that some people might visit your properties without real intentions of buying! To avoid wasting time, it is important to screen buyers and verify their financial plan –how are they planning to finance the transaction? A real estate broker can help you in this selection process before selling a property in Berlin. Serious buyers will formulate an offer to buy your apartment, in an official written document.

Get more detailed information about the steps of the transaction process, about the costs connected to a property sale in Germany and much more in our COMPLETE GUIDE TO SELLING A PROPERTY IN GERMANY (PDF).

The sale of a property is often the starting point of a new real estate project.

We give you 10 tips to stack all the odds in your favour !


A question, need advices or a real estate assessment ?

ADEN Immo is here for you: get in touch with us!

Our social networks

Find our favorites in preview and our real estate advices on our networks


Real estate experts in Berlin and Paris

ADEN IMMOBILIEN is an international team of experts focused on real estate in the German and French capitals.

ADEN IMMOBILIEN is your reference for properties in Berlin and Paris: sales, rentals, new development projects and buildings.