Real Estate Taxes in Germany in 2026: Purchase, Ownership, Rental, and Sale

Real estate in Germany is subject not to a single tax, but to several different tax situations. Upon purchase, Grunderwerbsteuer applies; during ownership, Grundsteuer applies; when renting out a property, the income is subject to Einkommensteuer; and upon sale, taxation as a private transaction under §23 EStG may sometimes apply.

The main rule for property owners: do not confuse the one-time tax upon purchase with the annual property tax. They are calculated according to different rules, paid at different times, and verified by the Finanzamt using different documents.

What Types of Taxes Are There?

Situation	Tax or Rule	What’s Important to Check
Real Estate Purchase	Grunderwerbsteuer	Federal state, transaction price, possible exemptions
Property Ownership	Property Tax	Property Tax Value, Tax Assessment Base, Municipal Tax Rate, Final Tax Assessment Notice
Renting Out	Einkommensteuer on Income from Vermietung und Verpachtung	Income, Umlagen, Werbungskosten, Anlage V
Sale	§23 EStG on private sales transactions	Holding period, owner-occupancy, profit, previously claimed depreciation (AfA)

The buyer also needs to account for the associated purchase costs—Kaufnebenkosten. In addition to the tax, these typically include notary fees, land registry fees, a possible real estate agent’s commission, mortgage costs, and a reserve for repairs or moving expenses.

Purchase Expenses	Practical Guide
Grunderwerbsteuer	3.5–6.5%, depending on the federal state
Notary and Land Registry	Often around 1.5–2.0% of the transaction price, but the total depends on the transaction and the mortgage
Real estate agent, if applicable	Depends on the contract, region, and type of property
Post-purchase reserve	Renovations, furniture, appliances, WEG fees, moving costs, unforeseen expenses

If the property is purchased with a mortgage, calculate the mortgage burden separately. The detailed process is explained in the article “” about mortgages in Germany:.

Grunderwerbsteuer: Tax on Purchase

Grunderwerbsteuer is a one-time tax on the purchase of real estate. In a standard sale, the tax base is usually the price stated in the notarial contract. The notary reports the transaction to the Finanzamt, after which the buyer receives a tax assessment (Bescheid).

Legally, either party to the transaction may be liable for the tax, but in practice, the Grunderwerbsteuer is almost always included in the buyer’s budget. Without settling this tax, the transfer of ownership in the Grundbuch is usually not finalized, because the Finanzamt must issue an Unbedenklichkeitsbescheinigung.

Grunderwerbsteuer Rates by State

Federal State	Rate in 2026
Baden-Württemberg	5.0%
Bavaria	3.5%
Berlin	6.0%
Brandenburg	6.5%
Bremen	5.5%
Hamburg	5.5%
Hessen	6.0%
Mecklenburg-Vorpommern	6.0%
Lower Saxony	5.0%
North Rhine-Westphalia	6.5%
Rhineland-Palatinate	5.0%
Saarland	6.5%
Saxony	5.5%
Saxony-Anhalt	5.0%
Schleswig-Holstein	6.5%
Thuringia	5.0%

Example. An apartment in Berlin costs 400,000 euros. At a rate of 6.0%, the Grunderwerbsteuer would be 24,000 euros. The same property in Bavaria, at a rate of 3.5%, would result in a tax of 14,000 euros. The difference arises not from the price, but from the land tax rate.

When Grunderwerbsteuer May Not Be Levied

Typical exemptions and exceptions must be checked against the GrEStG and the specific transaction. In practice, the following cases are most common:

• the price or Gegenleistung does not exceed 2,500 euros;
• inheritance or gifts, where the rules of Erbschaftsteuer and Schenkungsteuer apply;
• transactions between spouses or registered partners;
• Transactions between direct relatives: parents, children, grandchildren;
• Transfer of a property among co-heirs during the division of an estate.

You need to be careful with furniture and appliances in the contract. If movable property is indeed being sold along with the apartment, it is sometimes listed separately, but the amount must be realistic and verifiable. There is no universal safe percentage.

How Payments Are Made

1. The buyer and seller sign a notarized Kaufvertrag.
2. The notary notifies the Finanzamt of the transaction.
3. The Finanzamt sends a Bescheid regarding Grunderwerbsteuer.
4. Taxes must generally be paid by the deadline specified in the Bescheid; in practice, people often aim to pay approximately one month after receiving the notice.
5. After payment, the Finanzamt issues an Unbedenklichkeitsbescheinigung.
6. The Grundbuchamt uses this document to complete the registration of the new owner.

Starting April 1, 2023, real estate purchases cannot be settled in cash. Both the buyer and the seller must be prepared to verify the non-cash origin and flow of funds.

Grundsteuer: Annual Property Tax

The property owner pays Grundsteuer. Starting January 1, 2025, it will be calculated under a new system: the old Einheitswerte will no longer serve as the basis for the current calculation. Therefore, in 2026, it will be especially important for owners to refer not to outdated reference articles, but to their own Bescheide and the regulations specific to their property.

The basic logic of the calculation is as follows:

Property Tax Value × Tax Assessment Rate × Tax Rate = Property Tax

• The Grundsteuerwert is determined by the Finanzamt based on property data. It is not equal to the market price of an apartment or house.
• The Steuermesszahl is applied to the Grundsteuerwert to determine the Grundsteuermessbetrag.
• The Hebesatz is set by the municipality. This is often the reason why similar properties in different cities are subject to different tax amounts.

Why You Shouldn’t Rely on the Average Rate

Following the reform, the final Grundsteuer depends on the state, the municipal assessment rate (Hebesatz), the type of property, and the details specified in the tax assessment notice (Bescheid). Therefore, municipal assessment rate tables quickly become outdated and do not replace the official tax assessment notice. For self-verification, it is best to use your own Grundsteuermessbetrag and the municipality’s current assessment rate.

Calculation example. If the Grundsteuermessbetrag is 250 euros and the municipality’s Hebesatz is 470%, the annual Grundsteuer will be 250 x 470% = 1,175 euros.

The Federal Model and State Models

Some states use the Bundesmodell, while others use their own models. States with their own models include Baden-Württemberg, Bavaria, Hamburg, Hesse, and Lower Saxony. Saarland and Saxony apply rules similar to the Bundesmodell, but with some deviations. The practical conclusion is this: an example from another state is not suitable for an accurate calculation of your property.

Which Bescheide to check

Following the reform, the property owner typically has a chain of documents:

1. Grundsteuerwertbescheid—how the Finanzamt determined the property’s value for tax purposes.
2. Grundsteuermessbetragsbescheid—an interim assessment following the Steuermesszahl.
3. Grundsteuerbescheid—the final amount after applying the municipality’s Hebesatz.

Check the square footage, address, property type, ownership share, usage category, tax exemptions, and number of units. Errors should generally be contested via an Einspruch against the specific Bescheid where the error first appeared, rather than waiting for the next letter.

Can property tax be passed on to the tenant?

Legally, the owner is responsible for paying the tax. When renting out a property, Grundsteuer may be included in Betriebskosten and effectively passed on to the tenant, provided this is stipulated in the lease agreement and correctly reflected in the annual statement. Therefore, the tenant often sees this amount not as a separate tax, but as part of Nebenkosten.

When to Pay Grundsteuer

As a general rule, Grundsteuer is paid in four installments: February 15, May 15, August 15, and November 15. There may be exceptions, including a single annual payment, so you should refer to the dates listed in your Grundsteuerbescheid.

Tax on Sale: §23 EStG

In Germany, there is no separate, universal “apartment sales tax.” Typically, this refers to the taxation of profits from a private transaction under §23 EStG, provided the property is sold within the relevant timeframe and does not qualify for an exemption.

10 Years and Owner-Occupancy

Check the following three points:

• Has more than 10 years passed between the purchase and the sale?
• whether the property was used as the owner’s primary residence;
• Is there a profit after accounting for expenses and tax adjustments?

If the property was used exclusively as the owner’s primary residence at all times, the profit is generally not subject to taxation under §23 EStG, even if sold before 10 years have elapsed. Another important exception applies when the property was used as the owner’s primary residence in the year of sale and in the two preceding calendar years. If the apartment was rented out the entire time and is sold before 10 years have passed with a profit, the tax implications generally need to be examined particularly carefully.

Example without tax. A house was purchased on July 19, 2022, used exclusively as a primary residence, and sold on March 31, 2025. Although the holding period is less than 10 years, the exemption for primary residences may eliminate taxation on the profit.

Example involving a tax risk. An apartment was purchased on August 29, 2020, rented out the entire time, and sold on October 31, 2025, at a profit. The fact that the buyer was the former tenant does not, in and of itself, preclude an audit under §23 EStG.

How Profit Is Calculated

In simplified terms, profit is calculated as the sale price minus acquisition and selling costs, as well as allowable adjustments. For a rental property, the calculation is often more complex because previously claimed depreciation (AfA) can affect the result. If the profit is taxed under §23 EStG, it is added to the total taxable income and taxed at the individual income tax rate. The general logic behind the tax rates is explained separately in the article “” on tax rates in Germany:.

Hypothetical example. An apartment was purchased for 280,000 euros and sold for 320,000 euros. Direct costs associated with the purchase and sale: 15,000 euros. Simplified profit before individual adjustments: 320,000 – 280,000 – 15,000 = 25,000 euros. If the property falls under §23 EStG, this 25,000 euros will increase the taxable base.

For private sales transactions, a tax-free threshold applies: if the total profit for the calendar year is less than 1,000 euros, it is not taxed. This is specifically a threshold, not a universal deduction from any profit.

Rental Income Tax: Income Under §21 EStG

If you rent out a property, there is no separate fixed “rental tax”; instead, Einkommensteuer is levied on income from Vermietung und Verpachtung. For owners of investment properties (), this is typically reported in Anlage V of the section of the tax return.

Income includes not only the Kaltmiete (base rent) but also Umlagen—amounts that the tenant pays as advances toward operating expenses. Therefore, tax is calculated not based on the “gross rent” at face value, but on the result after deducting allowable expenses from the income.

Hypothetical annual example.

The apartment is rented out for 1,200 euros in base rent plus a 250-euro monthly advance payment for utilities. Over the course of a year, the owner received:

(1,200 + 250) x 12 = 17,400 euros.

Of this amount, 14,400 euros is the base rent (Kaltmiete), and 3,000 euros is the service charges (Umlagen). Let’s say the owner paid the following over the course of a year:

• 3,000 euros in operating expenses;
• 5,000 euros in loan interest;
• €320 for building insurance;
• 1,200 euros for repairs;
• €3,600 in depreciation (AfA).

Werbungskosten = 3,000 + 5,000 + 320 + 1,200 + 3,600 = 13,120 euros.

Taxable income = 17,400 – 13,120 = 4,280 euros.

What expenses are typically taken into account

Typical Werbungskosten for a rental property:

• Schuldzinsen – interest on a loan related to the rental property;
• AfA - depreciation of the building, but not the land;
• Property tax (Grundsteuer) and other property maintenance expenses;
• building insurance;
• repairs and maintenance;
• Management and documentation expenses, if they are related to the rental.

The principal amount of the loan is not included in expenses. For tax purposes, interest is what matters, not the repayment of the principal.

Non-residents and Foreigners

For German taxes, it is not your passport that matters most, but your tax status and source of income. If a person lives in Germany, this usually constitutes unbeschränkte Steuerpflicht. If a person no longer has a Wohnsitz or gewöhnlicher Aufenthalt in Germany but still owns German real estate, beschränkte Steuerpflicht often applies to their German income.

In practice, this means:

• Rental income from a German apartment may remain taxable income in Germany even after you move abroad;
• Selling German real estate after moving abroad still requires verification under §23 EStG;
• You should check the double taxation treaty applicable to your new country of residence.

When moving abroad, check two key points: whether your German tax residency is maintained, and how income or the sale of a German property is treated in your new country.

Documents You Should Keep

Scenario	Documents
Purchase	Purchase Agreement (Kaufvertrag), proof of non-cash payment, property transfer tax assessment (Bescheid), proof of payment, clearance certificate (Unbedenklichkeitsbescheinigung)
Ownership	Property Tax Assessment Notice, Property Tax Base Amount Notice, Property Tax Assessment Notice, letters from the municipality regarding the tax rate
Rent	Lease agreement, utility bill, bank statements, repair invoices, insurance policies, mortgage interest payments, documents for Anlage V
Sale	Purchase agreement, sales contract, expense receipts, documents for major improvements, depreciation (AfA) records

Common Mistakes

• Confusing Grunderwerbsteuer and Grundsteuer.
• Use the Grunderwerbsteuer rate from the old article without verifying the land.
• Calculate Grundsteuer using the “average rate,” not based on your own Bescheid and the municipality’s Hebesatz.
• It is a misconception that selling to a relative automatically exempts the transaction from §23 EStG.
• Deduct both the interest and the principal of the loan for the rental property.
• You can disregard Anlage V if the tenant covers the Nebenkosten.
• After moving out of Germany, consider the German apartment to no longer be subject to German taxation.

This article is a reference guide, not individual tax advice. If you have co-ownership, mixed use, a leasehold (Erbbaurecht), a sale following a lease, a property in another country, or are moving between countries, it is best to verify the final amounts using your tax assessment notice (Bescheid), contract, and in consultation with a tax advisor.

FAQ

Is there a 7% annual property tax in Germany? No. There is no universal “7% per year” rule. The annual property tax is called Grundsteuer, and it is calculated using a formula based on your municipality’s Hebesatz.

When will I find out the exact amount of Grundsteuer? From the Grundsteuerbescheid. To check it yourself, you can multiply your Grundsteuermessbetrag by the municipality’s current Hebesatz.

Can you pay Grundsteuer whenever it’s convenient? No. Follow the dates listed in the Bescheid. As a general rule, payments are due on February 15, May 15, August 15, and November 15.

Why won’t they complete the registration without the Grunderwerbsteuer? Because entering a new owner in the Grundbuch usually requires an Unbedenklichkeitsbescheinigung from the Finanzamt.

Can you buy real estate with cash? No. As of April 1, 2023, cash payments for real estate purchases are prohibited.

When is a sale most often not subject to taxation under §23 EStG? When more than 10 years have passed since the purchase, or when the property qualifies for the exemption for owner-occupied housing.

Is there a small tax-exempt threshold under §23 EStG? Yes. If the total profit from private sales transactions for a calendar year is less than 1,000 euros, it is not taxable.

Who pays Grundsteuer when renting? Legally, the owner. However, with a properly drafted lease agreement, the amount can be included in the operating costs and passed on to the tenant.

Is the rental tax a fixed amount? No. It is part of Einkommensteuer and depends on the net result: income minus allowable expenses.

What happens if I leave Germany but keep the apartment? Moving away does not, in and of itself, exempt the property from German tax rules. Rent and, in some cases, the sale of the property remain subject to German tax returns and double taxation agreements.