There are no restrictions on foreign nationals buying real estate in Germany. All individual and legal entities with legal capacity, whether resident or non‑resident, can invest in and own real estate in Germany.
For the sole process of buying the property, in particular signing the necessary documents, a normal tourist visa is enough.
However, please note that owning a property in Germany does not give you the automatic right to immigrate into the country. You still need a full time employment contract or investment license for the purpose of long term residence in Germany.
The Notary plays an important role in assuring the safe state of real estate transactions in Germany. The notary is a solicitor, who acts on behalf of the government and is authorized to certify deeds. The Notary is legally bound to act as an impartial middleman between buyer and seller. He provides independent and impartial advice to contractual parties.
The Notary has following tasks:
2.1. Check legal status of the property, including:
2.2. Execution of the contract, including:
The process of buying a property in Germany involves the followings:
3.1. Newly developed projects
It can last up to 3 months to finish all the paper work to register the property under the Buyer’s name with the local authorities since the takeover date.
3.2. Existing properties
After the Purchase contract is signed, the whole legal procedure to transfer the ownership of the property from the Seller to the Buyer can last up to 3 months.
Transaction costs involving in buying real estate in Germany vary from state to state. Below is the summary of associated fees a Buyer should be prepared to pay when buying a property in Germany:
The costs associated with owning a property in Germany include:
All of these expenses are paid by the tenant if apartment or house is rented out, apart from the Building Reserve Fund.
* For private persons:
Any private person who is receiving rental income in Germany, even if not living here, must fill in and sign his annual "Steuererklärung für beschränkt Steuerpflichtige", a special tax declaration sheet for people who are not paying their normal income tax in Germany.
The tax starts at 15% of the income when the income reaches EUR 7,665 per year. Interest, advertising and management expenses can be deducted.
* For corporates:
A corporate registered in Germany has to pay corporate income tax, solidarity surcharge and trade tax, which all sum up to approximately 30% of the profit. The exact figure varies from town to town.
*For private persons:
Corporates are charged approximately 16% on the profits of any real estate they sell.
Disclaimer: all information regarding tax issues stated in this document is for the purpose of providing you with a ground understanding and thus, should be used as guidelines only. For more accurate and detailed information on tax system in Germany, please consult a professional Tax Advisor. While the information provided is believed to be accurate, it may include errors or inaccuracies. As such, no reliance whatsoever should be placed on the information that is contained in this site as being accurate, complete and up to date. We will not accept responsibility for any cost, damage, expense or loss (whether direct or indirect) that is or may be incurred as a result of any possible error, misrepresentation and or omission that is, was, or may be contained in this site at any time and from time to time.
In general all properties in Germany, residential and commercial, can be classified as freehold.
Only very few properties are not freehold as they have a sort of leasehold called “erbpacht” (“hereditary leasehold”). You will be informed if the property is leasehold.
The mortgage application in Germany is straight forward. The documents you will need to provide include:
With the low default rate on German mortgages, German mortgage rates is among the lowest in the world. The average rate for non-residents is between 1,0% - 4,6% per year, depending on the term of the mortgage (from 5 years on). Please contact us for full information on interest rates.
Non-residents are limited to approximately 55 - 60 percent of the assessed value.
The interest on German mortgage for owner-occupied properties is not tax-deductible. However, if you rent yout property in Germany or opt for a buy-to-let investment, any expense incurred for generating your rental income can be offset against your taxable rental income, including mortgage expense, maintenance, repairs and improvements.
A common German mortgage is the fixed-interest loan. An interesting aspect of the German mortgage system is that it allows the borrower to set the terms for the rate of principle repayment (typically between 1 percent and 10 percent of the principle amount over the term of the loan), and whether to make additional principle-only payments (up to 10 percent of the outstanding amount). At the end of the loan term any outstanding principle must be paid in full either with cash or further financing.
Interest-only mortgages are offered in Germany and favoured by investors seeking rental or buy-to-let properties. During the term of the loan, only the interest portion is paid; the principle is due in full at the completion of the loan term. The interest payments are tax deductible.
Business operators who are from non-EU countries and who manage their company on location in Germany as a self-employed person require a residence permit for the purpose of self-employment (Aufenthaltserlaubnis für selbständige Tätigkeit).
This is generally issued if
The local immigration office (Ausländerbehörde) individually assesses to what extent these criteria are met. It takes into account the following aspects:
The immigration office consults the local trade office (Gewerbeamt) as well as local trade and business associations, e.g. local Chambers of Industry and Commerce (Industrie- und Handelskammer) or the Chambers of Skilled Crafts (Handwerkskammer).
Foreign business operators are considered to be self-employed if they are (e.g.):
Family members of foreign nationals may be granted permission to live in Germany if the foreigner possesses a settlement permit or a residence permit and if sufficient living space is available.
Spouses of foreign nationals can for instance claim a residence permit if the foreigner possesses a settlement permit or a residence permit for the purpose of self-employment. Additionally, the marriage must have already existed at the time the foreigner was granted the permit and the duration of the foreigner‘s stay is expected to exceed one year. If the foreigner posseses a residence permit for the purpose of economic activity (employed or self-employed), the spouse may take up work as well.
If these requirements are not met, it is still possible for a residence permit to be granted on a discretionary basis. Children (under 18 years of age) of a foreigner can claim a residence permit if both parents hold a residence permit or settlement permit, and if the children relocate to Germany with their parents.
A residence permit for the purpose of self-employment is limited to a maximum of three years.
If the investment project is successful (and success and subsistence appear to be secure over the long term), after three years it is possible to apply for a settlement permit (Niederlassungserlaubnis).
A settlement permit is unrestricted in time and place and automatically includes the right to take up gainful employment.