Additional Costs When Buying Property

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Additional costs to keep in mind

If you are thinking about buying a property, the first price you will see is the purchase price in the exposé. However, this is not the final price you will end up paying. Other costs are also incurred, which are referred to as additional purchase costs. Since these can amount to upwards of 10% of the purchase price, it is worth taking a look at when and for what these additional costs arise.

Commission

If you buy the apartment via the services of a real estate consultant, the consultant usually charges a commission, which must be paid in advance, cannot be financed and is subject to VAT. In Germany, this is on average 3.5-7% of the purchase price. However, from 23 December 2020, the seller (if using an broker) will be responsible for half of the commission. Moreover, many of our projects at Ziegert EverEstate do not charge a commission. This saves you a considerable part of the additional costs.

Real estate transfer tax

The land transfer tax is unavoidable and is usually payable immediately. When you buy an apartment, you automatically acquire shares in the land, i.e. in the entire house and the land on which the house stands. Taxes will then be due on this land, the amount of which varies from state to state. In Berlin, for example, you pay 6%, in Brandenburg 6.5%. If you buy an apartment in the increasingly popular city of Leipzig, you only have to pay 3.5%, according to the tax rate in Saxony. Read more about property taxes here.

Beim Wohnungskauf fallen 10 bis 15 Prozent zusätzlich zum Kaufpreis als Nebenkosten an.

Notary and land registry costs

In Germany, the purchase or sale of real estate requires the involvement of a notary. In addition to responsibility for the notarisation of the contract of sale, the notary often also arranges for its entry in the land register. The costs for these services amount to approximately 1-1.5% of the purchase price, plus VAT. Additional costs of around 0.5% are incurred for the land register entry itself. Only after the entry, which is carried out by the land registry office, could you describe yourself as the legal owner of the property.

Financing the ancillary costs

Since these costs together can be substantial, it is not unusual to want to also finance them with a loan. In theory this is possible, but not so easy to implement in practice. In these cases, the lenders have very high financial requirements to the borrower, as the additional costs do not contain any material equivalent to serve as collateral, such as the role the property plays in financing a mortgage. In addition, your final interest payments will be lower if you use less outside capital as financing.

It's difficult to get banks to finance these additional costs, so most of the time you will be liable to pay these out of pocket.

Evaluations and renovations

In addition to these more or less fixed additional costs, you may have to pay further expenses for possible expert opinions, modernisations and interest, which could increase the total sum. If you include all this in your budget planning, you should be fully prepared for any future investments. For more information about what you need to know before buying property in Germany, see our guide.

Written by:

Alex McKerrell

A Londoner by birth and a Berliner by choice, Alex has lived in the German capital for over a decade. Whether you need to know Berlin’s best Indian restaurant (Bahadur in Wilmersdorf, no question) or a history of Nikolaiviertel, he’s the person to ask.

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