The main added cost in acquiring a property in Germany is the agent’s fee, which in some cases can be up to 6% of the price of the property. The next expense is for legal representation. Property transactions in Germany can only be conducted by a notary, who acts independently of the seller and purchaser. Their fee is usually set at about 1.5% of the total purchase price. There are also some registration fees that have to be taken into account and you should allow something in the region of 0.5% for this.
Stamp duty in Germany is levied at 3.5% of the purchase price of a property. In addition to this, an annual property tax is payable, although the amount can vary according to location. As an example, one would expect the tax on a two-bedroom apartment in one of the larger cities to be about €300 per annum.
If you decide to sell at a later stage, you will also have to take into account the question of capital gains tax. As it stands today, if a property is sold 10 or more years following its acquisition, the capital gain is tax-free, but if it is sold before that, the profit is taxable.
Overall, it’s worth remembering that in Germany all costs and taxes are relative to the purchase price. With this in mind, it is recommended that when buying a second-hand property you should try to keep the price as low as possible by purchasing the extras, such as fitted kitchens — and other luxuries — separately.
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Sean Mason is the managing director of Mason Estates, Dublin
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