There is a clear difference between properties to rent out in Germany, also called “buy-to-let” or “capital acquisitions” and purchases for own use.
Buy-to-let properties can only be sold tax-free after 10 years. Your property purchase will be considered a business transaction if you have sold more than 3 properties in the last 5 years. Any gain will then be taxed as income tax (§23 EStG Abs. 1).
Residential properties that have been used solely by the purchaser can be sold tax-free within two calendar years after the purchase is signed.
For a mixed rent-out and own case, the sale is tax-free if the property was used for own purposes in the year of the sale and the 2 prior years.
In Germany, mind you, selling your property means canceling your mortgage. If your fixed period is not over it will result in early prepayment fees. You can avoid these fees by either paying off the entire mortgage in line with the mortgage contract, renting the apartment after moving, or not fixing the interest rate for longer than the period you plan to own the property. In addition, there is a special law in Germany (§ 489 BGB) that allows you to cancel your mortgage without any prepayment penalties after your mortgage is more than 10 years old. You can make use of this rule to pay off your mortgage and thus avoid any prepayment penalties when moving house.
Please note that we do not provide tax advice, but you can find an extensive interview with a tax advisor here that spells out many insights and provides useful tips.
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