Acquisition Costs

Property Transfer Tax - Notary Fees - Real Estate Agent Commission - Appraiser

Costs When Buying a House

When purchasing a property, the buyer incurs the following costs:

• Purchase price of the property
• Property transfer tax up to 6% of the purchase price (varies depending on the region)
• Notary fees approx. 2% of the purchase price
• Land registry approx. 0.5% of the purchase price (usually included in the notary fees)
• Financing costs (approx. 1-2% of the loan amount)
• Possibly real estate agent commission of 3-6% plus VAT on the purchase price (varies depending on the region)
• Possibly approval from the property manager (approx. €200)
• Possibly development fees

These ancillary purchase costs are payable according to their due dates. Without the tax clearance certificate (received after payment of the property transfer tax to the tax office), the purchase cannot be completed or the property registered in the land register. The date of payment of the purchase price and the transfer of ownership ("transfer of benefits and burdens") of the property are agreed upon with the seller in the purchase contract.

General Information

According to the German Civil Code (BGB), the building is an integral part of the property. The agreed purchase price is often the starting point for calculating ancillary costs.

Notary Fees

Real estate purchase contracts require notarization to be valid; a purchase "by handshake" is invalid. Notary fees are charged for their services, the amount of which depends on the purchase price or the amount of the mortgage.

Land Registry Entries

A buyer is only legally considered the owner once they have been registered in the land register (Section 1). Similarly, the registration of mortgages (Section 3) is usually necessary for financing. It may also be possible to assume existing mortgages to save costs (loans are not assumed in this way).

Real Estate Transfer Tax

This tax is levied on every purchase of real estate and amounts to up to 6% of the purchase price (usually the purchase price, unless loans are assumed, in which case the purchase price is lower and real estate transfer tax is also levied on the assumed loan amount).

Important:

Only those who have paid the real estate transfer tax receive a tax clearance certificate from the tax office and can be registered as the owner in the land register.

TIP:
If the purchase price includes fixtures such as a fitted kitchen or similar items, then no real estate transfer tax is payable on them.

Real Estate Agent Commission

When buying a used property, a real estate agent is often involved. A professional and reputable agent is well worth their fee. They bring a wealth of experience and in-depth market knowledge. Buyer's commission varies between 3 and 6 percent plus VAT, depending on the region.

Development Costs

The costs for public infrastructure, such as roads, footpaths, green spaces, and connections to main sewers and utility lines, are usually only included in the purchase price if explicitly stipulated in the notarized purchase agreement. These development costs are borne by the municipality, but up to 90% can be passed on to the buyers of a building plot. A five-figure sum is not uncommon. However, public infrastructure is only available up to the property line. Connections to utilities, such as pipes, sewers, and roads, on the property itself are considered house connection costs and are included in the building's construction costs.

Building Permit Fees

The building authority of the municipality/city charges fees for processing your building permit application. The specific amount must be obtained individually.

Financing Costs

These include the discount, which is an advance payment of interest. This upfront interest leads to a lower nominal interest rate. Not all financing fees are already included in the effective annual interest rate. Furthermore, commitment fees for loans not yet drawn down, possibly valuation fees, as well as loan and processing fees may apply.

Construction Financing Costs

Banks charge a premium for providing debt capital in the form of construction financing. Depending on the bank, you will pay more or less interest. You can find out how to save money on construction financing at baufinanzierungsrechner.eu. There you will find a comparison of construction loan interest rates with current interest rates for financing your home.

Buying an Apartment

The Condition of the Building

How is the overall condition of the apartment building assessed? What has been renovated in recent years (roof, facade, heating, pipes, etc.)? Are any renovation or refurbishment works planned? An overview of decisions already made can be found in the minutes of the owners' meetings (see below).

How many parties live in the building, and how many are tenants? Owners generally pay closer attention to the overall condition and cleanliness of the building.

However, caution is advised with large owners' associations, as disputes can often arise, and decisions are frequently difficult to reach, especially at owners' meetings. Sometimes several (even smaller) apartment blocks are combined into a single large owners' association. But even small associations can experience problems if, for example, three-quarters of the shares are held by one family. Reviewing the minutes of the owners' meetings from recent years can provide more clarity.

Utility Costs

Review your utility bill; don't rely solely on the owner's statements. This is where you'll find the actual utility costs for your apartment.

Pay attention to the billing methods: Is it calculated per residential unit, square meter of living space, or number of occupants, and is the distribution method sensible? For example, garbage collection fees should be allocated per household. Cable fees, on the other hand, are better billed per residential unit.

Maintenance Reserve Fund

Inquire about the current status of the maintenance reserve fund. If renovations or repairs are needed on the building, the money saved here will be used. If there is no money saved, or too little, a special assessment may be levied. Again, reviewing the minutes of the owners' meetings will provide this information.

The maintenance reserve fund is common property and is not paid out when the apartment is sold; it transfers to the buyer without compensation.

Minutes of Recent Owners' Meetings

You should review the minutes of the last two or three annual owners' meetings. These minutes detail the repairs that still need to be carried out and those that have already been completed. The cohesion of the building community can also be reflected in the minutes of the owners' meeting (prepared by the property manager). If there are recurring conflicts or if a majority is blocking renovation work, this should be investigated!

Property Manager

The property manager bears a great deal of responsibility for the residential complex they manage. They prepare the statement of accounts and the budget, ensure adequate maintenance reserves, chair the owners' meetings, obtain cost estimates for repairs, etc., supervise tradespeople, and propose necessary renovations to the building. The property manager acts in trust on behalf of the community.

The property management company is elected by the owners' association for a maximum of five years and is paid monthly by each owner along with their utility bill.

Declaration of Division

The declaration of division specifies the respective ownership shares (co-ownership shares) and indicates the associated rooms, parking spaces, etc. The community rules, often included in the declaration of division, govern the relationships between the owners and communal living in the building. Request a copy of the declaration of division before the notarization.

The co-ownership share is calculated based on the size of the apartment and its ancillary rooms. The larger this share, the higher the ancillary costs. The declaration of division regulates, among other things, the following:

• Voting procedures (one vote per owner, one per unit, or one per unit)
• Election of the property manager
• Community rules
• Special rights of use
• Individual ownership
• Co-ownership shares
• Restrictions on alienation