What closing costs are
Closing costs (Kaufnebenkosten) are all costs that come on top of the price when you buy property in Germany. Three items make up almost all of it: real estate transfer tax paid to the tax office, fees for the notary and land registry and, if a broker is involved, the broker commission.
How high they are depends mainly on the federal state and the broker. In Bavaria without a broker they are about 5% of the price, in North Rhine-Westphalia with a broker almost 12%. There is no fixed rate, so calculate with your own figures.
Closing costs = transfer tax + notary and land registry + broker commission
Real estate transfer tax: rate, exemption limit and rounding
Real estate transfer tax (Grunderwerbsteuer) is the largest item. Since 2006 each federal state sets its own rate (Art. 105 (2a) Basic Law). Today it ranges from 3.5% in Bavaria to 6.5% in Brandenburg, North Rhine-Westphalia, Saarland and Schleswig-Holstein.
The tax base is the value of the consideration, normally the purchase price (§§ 8, 9 GrEStG). The tax office rounds the tax down to full euros (§ 11 (2) GrEStG). If the tax base is no more than €2,500, no tax is due (§ 3 no. 1 GrEStG). This is an exemption limit, not an allowance: a parking space for €2,501 in Baden-Württemberg already costs €125 in tax.
Buyer and seller owe the tax jointly; in the purchase agreement the buyer almost always takes it on. It is due one month after the tax assessment (§ 15 GrEStG). Only after payment does the tax office issue the clearance certificate without which the land registry will not register you as owner (§ 22 GrEStG).
Real estate transfer tax by federal state
| Federal state | Rate |
|---|---|
| Baden-Württemberg | 5.0% |
| Bavaria | 3.5% |
| Berlin | 6.0% |
| Brandenburg | 6.5% |
| Bremen | 5.5% |
| Hamburg | 5.5% |
| Hesse | 6.0% |
| Lower Saxony | 5.0% |
| Mecklenburg-Western Pomerania | 6.0% |
| 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% |
Worked example: €300,000 in Bavaria and in North Rhine-Westphalia
The calculator is prefilled with an apartment for €300,000 in Bavaria, 1.5% for notary and land registry and a 3.57% buyer's share of the broker commission:
- Transfer tax: €300,000 × 3.5% = €10,500
- Notary and land registry: €300,000 × 1.5% = €4,500
- Broker commission: €300,000 × 3.57% = €10,710
- Closing costs: €25,710, that is 8.57% of the price
The same apartment in North Rhine-Westphalia: €19,500 transfer tax (6.5%), closing costs of €34,710 or 11.57% in total. Without a broker in Bavaria it is €15,000 or 5%.
Notary and land registry
A property purchase in Germany is only valid if a notary records the contract. The fees follow the court and notary fees act (GNotKG) and rise with the price. Recording the purchase agreement costs a double fee, plus completion, escrow work and expenses.
The land registry charges for the priority notice, the transfer of ownership and, if you finance, the registration of the land charge (Grundschuld). Notary and land registry together usually come to about 1.5% of the price. The calculator uses this value as an estimate; the exact amount is only on the invoices.
Broker commission: who pays how much
Since 23 December 2020, §§ 656a to 656d of the German Civil Code (BGB) govern the commission when private individuals buy apartments and single-family houses. The broker agreement must be in text form. If the broker works for both sides, they may only charge both the same. If only the seller engaged the broker, the seller may pass on at most half to you, and you only pay once they have paid their part.
With a 7.14% commission including VAT split in half, you pay 3.57% of the price. If you engage the broker alone, for example with a search mandate, the split does not apply and you may owe the full commission. For multi-family and commercial buildings the commission is freely negotiable.
Fixtures and maintenance reserve
Movable items you buy along with the property are not part of the land. If the purchase agreement lists, for example, a fitted kitchen with its own price, no transfer tax is due on that part. With €15,000 for the kitchen and a 6% rate that is €900 less tax. The price must be reasonable; the tax office checks this.
The proportionate maintenance reserve (Instandhaltungsrücklage) of a condominium does not reduce the transfer tax. The Federal Fiscal Court decided this in 2020 (BFH, judgment of 16 September 2020, II R 49/17). The calculator therefore offers no field for it.
Closing costs in your tax return
If you rent out the property, transfer tax, notary and land registry fees for the purchase agreement and transfer of ownership and the broker commission count as acquisition costs. You do not deduct them at once but spread them over the depreciation of the building share (§ 7 (4) EStG). The land share is not depreciated.
Notary and land registry fees for the land charge belong to the financing instead. They are deductible as income-related expenses in the year you pay them (§ 9 (1) sentence 3 no. 1 EStG), so ask for the notary invoice to be split. If you live in the property yourself, you cannot deduct the closing costs.
Common mistakes with closing costs
- Using a flat percentage: depending on the state and the broker, closing costs range from about 5% to 12% of the price with a split commission, and more with a full commission.
- Expecting the bank to finance them: banks usually do not, so plan to pay them from equity.
- Forgetting the tax assessment: transfer tax is due one month after the assessment, often before you move in.
- Overvaluing fixtures: an inflated kitchen price catches the tax office's eye and ends up costing more than it saves.