German Mortgage Glossary
The purchasing costs include the property transfer tax, notary and land registry fees, as well as real estate broker commission. You have to pay them when building or buying a property, in addition to the property costs. It is quite normal for German lenders to expect you to pay at least the purchasing costs from your savings.
1. Real estate commission (0–7,14%)
This fee is paid to the real estate agent for successfully supporting the buyer to sell the property the property. It can range from 0% - 6% on the property price. With the value added tax (VAT) of 19% in Germany, the total commission fee will lie anywhere between 0–7,14%. Frequently half the maximum fee is charged, i.e. 3,57%. In Germany, the commission is not uniformly regulated, (it’s agreed between the seller of the property and the broker) but is capped at a maximum of 7,14% of the purchase price. Depending on the region in Germany where the property is purchased, the commission is either fully paid by the buyer, the seller or split between the two parties. For example, in Berlin the buyer pays the full commission while in Munich the fee is split
2. Property transfer tax (3–6,5%)
The second highest fee associated with is the property transfer tax (Grunderwerbssteuer). The tax amount will vary depending in which region of Germany the property is purchased. As of 2018, the tax ranges from 3-6,5% of the purchase price. For example, in Berlin the property transfer tax is 6% whereas in Munich it is only 3,5%. The property transfer tax is an important factor in transferring the property rights to the new owner. Only after the tax office has confirmed that the property transfer tax has been paid will the buyer be entered as the new property owner in the German land registration (Grundbuch).
3. Notary & land registry fees (1,5%-2%)
In Germany, purchasing property only becomes legally binding when it is registered by a public notary. The associated notary fee is typically 1.5-2%% of the purchasing price. See the notary fee glossary for details. Among other things, the notary will take care of drafting the purchasing contract, entering the buyer in the land registration and generally taking care of all communication with the German tax office. It is up to the buyer to decide which notary they wish to use.