Taxes when selling real estate in Germany – guide for private sellers
Tax aspects play an important role when selling real estate in Germany. Whether and what taxes are due on the sale depends on several factors – in particular how long the property was owned and how it was used (owner-occupied or rented out).
In this guide, we provide an overview, explain speculation tax and other possible taxes, point out special regulations (e.g. for rented properties or inheritances) and give tips on how private sellers can avoid unnecessary tax burdens.
A house sale needs to be well calculated: Under certain conditions, the sale of a property may incur taxes that reduce the profit.
What taxes can be incurred when selling real estate?
When selling a property, various taxes may be incurred depending on the constellation of the sale:
- Speculation tax (income tax on sales profit) – is payable if a private property or house is sold at a profit within the speculation period (see below).
- Trade tax – is due if the property sale is classified as a commercial trade (e.g. in the case of frequent sales).
- VAT – may apply in special cases, for example in the case of a commercial sale (e.g. by a real estate agent or developer). In addition, notary fees are always subject to VAT in the event of a sale, although this usually applies to the buyer.
- Land transfer tax – this tax is usually paid by the buyer when ownership is transferred. As the seller, you do not normally pay it unless otherwise agreed in the purchase contract.
Good to know: If certain conditions are met, a property sale remains tax-free. In the next section, we explain the most important tax – the speculation tax – and the conditions under which no tax is payable on the sale of a house.
Speculation tax on the sale of real estate
The speculation tax is basically the income tax on the profit from a private property sale. It is levied if there are less than ten years between the purchase and sale of the property. This ten-year period is known as the speculation period. If you sell within this period, it is a private sale in accordance with §23 EStG – the profit made is then taxable. However, exceptions also allow a tax-free sale within the ten years, as described below.
Deadlines and exceptions: When is the sale of real estate tax-free?
As a general rule, privately used properties can be sold tax-free at any time. A property counts as owner-occupied if the seller (or close family members) lived in it for residential purposes in the year of sale and the two previous calendar years. Important: Family members such as spouses or children may have lived there rent-free (children must be entitled to child benefit). If this owner-occupation rule is adhered to, no speculation tax is payable – even if the holding period is less than ten years.
On the other hand, the sale of a rented property is subject to speculation tax as long as the ten-year period has not expired. In this case, you must pay full tax on the profit from the sale. To sell a rented property tax-free, you must therefore either meet the ten-year deadline or move in yourself in good time before the sale. Specifically, it is advisable to hold a rented property for at least 10 years and 1 day. Alternatively, owner-occupation in the last two full years plus the year of sale can avert the tax liability – i.e. You use the property for your own residential purposes before selling it, so that it counts as a private home.
Speculation period when selling real estate – the relevant period between purchase and sale is 10 years. After this period, a sale is tax-free (provided it is a private asset). If you use the property yourself, a shorter period is sufficient: if the owner lived in the property themselves in the year of sale and the two preceding years, no speculation tax is payable.
Please note: The time of the intention to sell counts for the calculation of the ten-year period – not just the notary appointment. This means that the tax office already considers the
Calculation of speculation tax (with sample calculation)
If speculation tax is payable, it is based on your personal income tax rate on the capital gain realized. To determine the taxable profit, you can first deduct the original purchase price from the sale price. In addition, incidental sales costs and value-enhancing investments reduce the profit: deductible are, for example, estate agent fees, notary costs, advertising costs, any early repayment compensation from the bank and renovation costs to promote the sale. You can also deduct the land transfer tax paid on the purchase. Please note, however, that if the property was previously rented out, the depreciation made will increase the profit again – it will be added to the sale price, as it already had a tax-reducing effect during the rental period.
The final result is the taxable sales profit, to which your individual tax rate is applied. To illustrate this, here is an example: you bought a condominium in 2018 for €200,000 and sell it in 2025 for €300,000. As less than 10 years have passed since the purchase and the apartment was rented out, the profit is subject to speculation tax. The difference between the sale price and the purchase price is €100,000. Assuming you had deductible costs (estate agent, notary, etc.) totaling €10,000, the profit on the sale is reduced to €90,000. You must now pay tax on this amount. If your personal income tax rate is 35%, for example, you will have to pay around €31,500 income tax on the sale. For higher incomes, the tax rate can be up to 42% or 45% (top tax rate), while lower incomes will incur correspondingly less tax.
Tip: Since 2024, there has been a tax-free allowance for private capital gains of €1,000 per year (until 2023 it was €600). If your profit is below this limit, it remains completely tax-free. However, if the gains exceed €1,000 in a calendar year, the tax-free allowance no longer applies – the entire amount is then taxed. In practice, this tax-free amount rarely plays a role in real estate sales due to the typically high profits; however, it can be relevant if other private sales transactions (e.g. profits from precious metal sales) occur in the same year.
Tax-free or taxable? – Overview table
The following overview helps you to quickly assess when a property sale is tax-free and when taxes are due:
| Sales scenario | Tax consequence |
| Owner-occupied property (own use in the year of sale + 2 previous years) | No speculation tax – sale tax-free. |
| Property privately owned for more than 10 years (holding period > 10 years) | No speculation tax – sale tax-free. |
| Property sold within 10 years, not owner-occupied (e.g. rented out) | Speculation tax is payable on the profit from the sale. |
| Sale of more than two properties in 5 years (commercial trade) | Classification as commercial – income tax and trade tax on profits, usually also VAT liability.Usually also subject to VAT. |
| Sale of a property from business assets (company or business property) | Taxable as current operating profit – capital gains are subject to income tax (or corporation tax) and possibly trade tax. |
(Note: The real estate transfer tax is not listed here as it is usually borne by the buyer).
Other possible taxes when selling real estate
In addition to speculation tax, there are other types of tax that may be relevant in connection with real estate sales:
- Income tax on sales profits: As described above, speculation tax is strictly speaking part of income tax. For private sales within the 10-year period, the profit is taxed as other income at the individual tax rate. If the sales take place outside the period, no income tax is payable (and any losses are irrelevant for tax purposes).
- Trade tax: If the tax office classifies the sale as commercial real estate trading, the profit is also subject to trade tax. As a rule, it is assumed to be commercial if more than three properties are sold within five years – known as the three-property threshold. This threshold can be exceeded if four properties are sold in a short period of time. In such cases, the property seller is treated as a trader: Trade tax is due in addition to income tax. Although the trade tax paid can be offset against income tax to a certain extent, this is usually
not possible in full , as the trade tax may be higher depending on the municipal assessment rate. This is usually not an issue for occasional private sellers – but anyone who buys and sells properties frequently should definitely observe the three-property rule. - Value added tax (VAT): The sale of privately used residential properties is generally exempt from VAT. The situation is different in the commercial sector: If properties are sold by a commercial dealer or property developer, 19% VAT may be charged on the sales price. This applies, for example, to the sale of new buildings within less than two years of completion or the sale of land by companies subject to VAT. Private sellers generally do not have to worry about this – they do not act as entrepreneurs subject to VAT. However, VAT is almost always charged on incidental sales costs (notary and estate agent invoices include VAT). These costs in turn reduce the profit and thus the income tax burden, as described above.
Special case of business assets: If you sell a property that is part of your company’ s business assets (e.g. a company building or a rented apartment in a real estate GmbH), different rules apply. No speculation period applies here – the proceeds of the sale are taxable in full. The profit is recognized as operating income and is subject to regular taxation (corporation tax for corporations or income and trade tax for partnerships or sole proprietorships). In such cases, attempts are often made to optimize the tax burden through a clever choice of legal form (e.g. holding structures) – however, this is beyond the scope of this guide.
Special regulations for inheritance and gifts
What applies if the property was inherited or given away instead of bought? In such cases, the so-called “footsteps principle” applies. This means that the heir or donee
For example, you inherit a house in 2025 that the deceased bought in 2018. When you sell this house, the tax office checks the period from 2018 to 2025 – only 7 years have passed. Result: The sale would be taxable if it is not for your own use, as the speculation period has not yet expired. This can be avoided either by waiting until 2028 (expiry of the 10 years since 2018) or by living in the property yourself until it is sold (use for own use as an exception).
Please note that other taxes may apply in the case of inheritance/gift – namely inheritance or gift tax. This is payable independently of speculation tax. In the worst case, a double tax burden may arise: You first pay inheritance tax on the inherited property and, if you sell it on quickly, you also pay income tax on the profit. Particular caution is therefore required with inherited properties. If in doubt, you should seek professional advice before selling an inherited property. A notary or tax consultant can check whether and when a sale makes the most sense from a tax perspective.
Tips: How to avoid an unnecessary tax burden when selling
Finally, some practical tips on how you can save or avoid taxes as a private real estate seller:
- Check your own use: Consider whether you can use the property for sale yourself first. For example, if you move out of a rented apartment and live in it yourself for at least two years plus the year of sale, the sale remains tax-free – even before 10 years have passed. This step requires planning, but can save you thousands of euros in tax.
- Observe holding periods: If owner-occupation is not possible, try to wait for the 10-year speculation period before selling. The longer you hold the property, the sooner you will achieve tax exemption. So plan the time of sale strategically – sometimes it pays to wait a little longer to meet the deadline.
- Make the reason for the sale credible: If you do have to sell within 10 years (e.g. for professional or family reasons), document these circumstances. Although this does not change the tax liability, it can be important in order to exclude
the commercial nature of the sale . A one-off sale out of necessity (e.g. divorce or job change) is regarded by the tax office as private asset management – in contrast to planned purchases and sales for profit. - Divide up the items for sale: Consider which parts of the sale can be sold separately to reduce the property sale price. Background: If inventory is also sold, it increases the official purchase price and therefore the taxable profit. It is often better to sell the fitted kitchen, furniture or accessories separately from the house, for example. These movable goods are not subject to speculation tax, but reduce the taxable proceeds of the property. It is important that this is clearly stated separately in the contract.
- Use tax allowances and lower tax rates: If a sale within the speculation period is unavoidable, you could try to spread the profit over two calendar years. For example, part of the purchase price could be officially paid in one year and the rest in the following year. This might allow you to use the annual tax-free allowance (€ 1,000 each) twice. The personal tax rate is also lower in years with lower income – if your remaining earnings are lower next year (e.g. due to parental leave or retirement), deferring the sale to this year can be advantageous for tax purposes.
- Don’t sell too much: If you own several properties, pay attention to the three-property limit. More than two sales within five years can be classed as commercial trading. Time your sales so that you stay below this threshold to avoid triggering trade tax.
- Obtain professional advice: Every property sale is individual. Seek advice from a tax advisor before selling, especially if you are unsure about what taxes might apply. A professional can help you to exploit legal structuring options to minimize the tax burden. Notaries also know the common tax pitfalls and can provide advice. The cost of tax advice can often pay for itself in tax savings.
Conclusion: As a private seller, you should know the tax rules to avoid unpleasant surprises. Not every house sale is taxable – often the sale remains tax-free, for example in the case of owner-occupied homes or after a long holding period. However, if tax is payable, there are ways to reduce the tax burden. Find out in good time and seek expert advice if necessary. This will ensure that you can ultimately make the maximum net profit from your property sale.
Frequently asked questions about taxes when selling real estate
If you sell your property within ten years of buying it and have not used it yourself, speculation tax is generally payable on the profit. Trade tax may also be due on several sales within a short period of time.
As a rule, ten years from the date of purchase. Alternatively, the sale remains tax-free if you have lived in the property yourself in the year of sale and the two preceding calendar years.
Yes, since 2024 there has been an
No. The so-called footstep principle applies to inheritances: the time limit continues to run from the date of purchase by the deceased. An inherited property may therefore be taxable, even if you have only recently received it.
Anyone who sells more than three properties within five years can be classified as a commercial seller by the tax office. In this case, trade tax is payable in addition to income tax.
Deductible items include the original purchase price, estate agent and notary costs, advertising costs, land transfer tax and value-enhancing investments (e.g. renovations). These reduce the taxable profit.
Yes, if the ten-year speculation period has not yet expired and there was no owner-occupation. To sell tax-free, you would either have to wait for the deadline or move in yourself and provide proof of use.
For example through:
- Sale after expiry of the 10-year period
- Self-use before sale
- Distribution of sales proceeds over two years
- Separate sale of inventory
- Compliance with the three-object limit
With a tax consultant or your local tax office. For complex cases, it is worth seeking professional advice in advance of the sale.
Table of contents
Click on a section to jump directly to it.
- What taxes can be incurred when selling real estate?
- Speculation tax on the sale of real estate
- Deadlines and exceptions: When is the sale of real estate tax-free?
- Calculation of speculation tax (with sample calculation)
- Tax-free or taxable? – Overview table
- Other possible taxes when selling real estate
- Special regulations for inheritance and gifts
- Tips: How to avoid an unnecessary tax burden when selling
- Frequently asked questions about taxes when selling real estate
