You must expect these additional costs when purchasing real estate
The biggest cost factor when purchasing a property is undoubtedly the purchase price. However, there are also direct and indirect additional costs, which are based on a percentage of the purchase price.
Mandatory and optional: Additional costs when purchasing real estate
The direct ancillary costs of purchasing real estate currently range between 10% and 15% of the purchase price. For a property worth €300,000, for example, you would incur €30,000 to €45,000 in acquisition costs. The exact costs depend on the state in which the property is located and on factors such as real estate transfer tax, land registry costs, and the services of a notary. These three direct ancillary costs are generally incurred when purchasing a property.
Indirect acquisition costs can be avoided
If you want to save money, there are various options for indirect acquisition costs. Hiring a real estate agent, appraiser, or moving company is recommended but not mandatory. The costs for renovations and financing can also be planned freely. In addition, you should be aware of your local advantages in terms of development fees. By the way: we'll reveal another way to reduce the incidental costs of buying real estate at the very end.
The basis of ancillary costs when purchasing real estate: the purchase price
In principle, all ancillary costs associated with the purchase of real estate depend on the purchase price of the property as a percentage. The purchase price forms the basis for determining the ancillary costs using the corresponding percentage.
Largest incidental acquisition costs: Real estate transfer tax 3.5% - 6.5%
The amount of real estate transfer tax is not regulated uniformly across Germany, but is determined at the state level. It is based on the purchase price of the property and the tax rate of the respective state. The percentage rate of the state in which the property is located applies to the calculation of ancillary costs. For example, while in Bavaria only 3.5 percent of the purchase price has to be paid to the tax authorities, in North Rhine-Westphalia it is almost twice as much. Those who live in a border region may be able to save considerably on real estate transfer tax when purchasing residential property. Please update tax rate and status: Thuringia 5.0 Saxony 3.5 January 2024
Incidental acquisition costs for the notary: 1.5% to 2%
Since real estate transactions involve very large sums of money and, in some cases, high claims for damages, all purchase agreements for real estate or land in Germany must be processed by a notary. This notarization of a purchase agreement is required by law in Germany under Section 311b of the Civil Code (BGB). The notary drafts the purchase agreement according to the specifications of both parties (buyer and seller) and acts as an intermediary – in the best sense of the word. The notary charges a fee of approximately 1.5% to 2.0% of the purchase price for their services. These additional costs associated with the purchase of real estate are among the lowest financial expenses, but can still amount to several thousand euros depending on the purchase price and the notary's services, such as drawing up the purchase agreement, land registry entry, or notary escrow account.
Land registry fees are also incurred: approx. 0.5%
The land registry office charges approximately 0.5% of the purchase price for transferring ownership, registering any land charges, and creating a new land register entry. This smallest portion of the ancillary costs associated with purchasing real estate is automatically sent to the buyer by the relevant tax office after the purchase agreement has been concluded and must be paid within a certain period.
Agency fee: Broker commission proportionate up to approx. 3.57%
Since the end of 2020, there has been a so-called brokerage fee sharing arrangement for the sale or purchase of residential properties such as single-family homes, apartments, and granny flats. This means that the seller and buyer share the costs of a real estate transaction equally, i.e., 50:50, if both hire the same real estate agent. Real estate agents usually charge a performance-based fee for marketing services, conducting viewings, checking prospective buyers, obtaining various documents, taking photos and drone shots, and preparing a property brochure. As already described, this brokerage commission is payable either by the seller or by the buyer and seller in two equal parts, depending on the federal state. Unlike the commission, the amount of the brokerage fee is not regulated by law in Germany. It can therefore theoretically be freely negotiated. In 2024, the standard brokerage commission was between 5.95% and approximately 7.14% of the purchase price. These additional costs associated with the purchase of real estate have been significantly reduced by the latest change in the law, as only 50% of the total amount is now payable by the seller.
Bank processing fee for financing: Statutory 0%
The Federal Court of Justice (BGH) recently ruled that processing fees for bank loans for real estate financing are inadmissible. Good to know: Fees are now a thing of the past. However, banks have included a recurring fee in the monthly or annual interest rates.
Ways to reduce ancillary costs when purchasing real estate
If you purchase a property that also includes furniture, you should definitely specify this in the purchase agreement. This will reduce the real estate transfer tax, as this tax is generally only payable on real estate or land. If, for example, a kitchen is built into the property, it is not considered a fixed component and can reduce the ancillary costs accordingly. However, the value must be estimated and stated realistically. Our tip: Consult your tax advisor for advice on this. We have compiled this information for you to the best of our knowledge, but cannot guarantee its completeness or accuracy. If you have any further questions about additional costs when purchasing real estate, we recommend discussing your individual and specific case with a tax advisor.
All information has been compiled to the best of our knowledge. However, we cannot accept liability for the details.
