Germany - Property Taxes

Property Tax

Property tax in Germany is known as “Grundsteuer” and is based on the value of the property. It is usually paid annually and is calculated by the local government.
The tax rate can vary depending on the location of the property and the local government’s budget.
For example, in Berlin the property tax rate is around 0.5% of the property’s value per year, while in Munich it is around 0.6%.

When a property is sold in Germany, the seller is required to pay CGT on any profit made from the sale.
The CGT rate for private individuals is currently 30% for properties that have been owned for less than 10 years and 25% for properties owned for more than 10 years.
For example, if an individual sells a property for €500,000 that they bought for €400,000, they would have to pay €30,000 in CGT if they have owned it for less than 10 years, and €25,000 if they have owned it for more than 10 years.

Inheritance tax in Germany is imposed on the transfer of assets upon death.
The tax rate varies depending on the relationship between the deceased and the beneficiary, with a higher tax rate for more distant relatives.
There is no inheritance tax between spouses or between parents and children.
For example, if a father leaves a property worth €500,000 to his son, there would be no inheritance tax imposed.

Gift tax in Germany is imposed on the transfer of assets during a person’s lifetime.
The tax rate is the same as the inheritance tax rate and also varies depending on the relationship between the giver and the receiver.
For example, if a father gifts a property worth €500,000 to his son, there would be no gift tax imposed.

If a property is rented out, the owner must pay tax on the rental income.
The tax rate depends on the owner’s personal income tax rate.
For example, if an individual has a rental income of €20,000 per year and a personal income tax rate of 42%, they would have to pay €8,400 in taxes on their rental income.

First-time buyers may be eligible for a reduced CGT rate of 50% if the property is sold within 10 years of purchase.
Tax relief can be claimed for interest paid on a mortgage for the purchase of a primary residence.
There are also various government programs and subsidies available for energy-efficient renovations and improvements to properties.