Often overlooked by investors, German property in fact can give good returns especially in city centres like Berlin and Frankfurt where rental accommodations are in high demand.
1. Are there any restrictions on foreigners buying property in Germany?
No, there are no such restrictions. Any private person or corporation can buy real estate in Germany regardless of their nationality.
2. Apart from the purchase price, what are the other expenses when buying property in Germany?
a.) The Stamp Duty varies between 3.5% and 6.5 %, in the different federal states. In Berlin and Hessen (e.g. Frankfurt am Main), it is 6 %.
b.) Costs of notary and land registration depend on the value of the property. A purchaser should calculate between 1.2 and 2.5 % of the purchase price.
c.) Legal fees for accompanying the purchase are 1 % (+19 %VAT when applicable).
3. What are the holding costs and taxes as a foreign property owner in Germany?
German property is subject to real estate tax (Grundsteuer). It is basically a payment to the respective city, where the apartment or house is located, for providing the infrastructure. The tax base is the ‘assessed value’ (Einheitswert). This annually levied tax depends on several factors including location, size and use. It also depends on the German State (Bundesland) in which the property is located and is approximately 5 – 7 EUR/sqm/year. For a 1-bedroom apartment in Berlin, this will usually amount to about 100-250 Euro.
The owner also has to pay for his share in the costs of the building, namely an upfront payment on these costs called “commonhold contribution”. The majority of these costs (usually about 70-80%) can also be recovered from the tenant, if the apartment is rented out.