Germany: selling a property, tax and deadline

When the sale is taxable

Whoever sells a property from private assets pays tax on the gain if no more than ten years lie between acquisition and sale (EStG § 23 para. 1 sentence 1 no. 1). It is called the speculation tax, but it is not a separate tax: it is ordinary income tax on income from a private sales transaction (EStG § 22 no. 2).

For the period, what counts in principle is the day the contracts were concluded: the notarized purchase contracts, not the entry in the land register or the handover (BFH IX R 23/13). The period ends at the end of the day that corresponds to the purchase day ten years later (AO § 108 with BGB §§ 187 and 188). With a purchase on June 15, 2020, June 15, 2030 is still within the period; a sale on June 16, 2030 is tax-free.

When you pay nothing

In these cases the gain stays tax-free:

• More than ten years lie between the two contracts.
• You lived in the property yourself exclusively from acquisition to sale.
• You lived in it yourself in the year of sale and in the two years before (EStG § 23 para. 1 sentence 1 no. 1 sentence 3).
• The total gain from private sales transactions is under €1,000 in the calendar year (exemption limit, EStG § 23 para. 3 sentence 5).

Own use and the exemption limit in more detail

You do not need to have lived there for three full years for the third exception. According to the Federal Fiscal Court, it is enough to have lived in it yourself for at least one day in the second year before the sale, continuously in the year before and for at least one day in the year of sale: a short letting after moving out then does no harm (IX R 10/19).

The exemption limit is not an allowance: from a gain of €1,000 the whole gain is taxed, not just the part above. If the property belongs to two owners, each has their own limit.

How the gain is calculated

The gain is the difference between the sale price on one side and the acquisition or production costs and the income-related expenses on the other (EStG § 23 para. 3 sentence 1). The acquisition costs, by the standard of HGB § 255 para. 1, also include the incidental costs of the purchase, such as real estate transfer tax, notary and agent. Income-related expenses are the costs the sale causes you, for example the agent’s commission or ads.

If you let the property and claimed depreciation (AfA), it lowers the acquisition costs and raises the gain (EStG § 23 para. 3 sentence 4). If there is a loss, no tax arises; it only reduces gains from private sales transactions, in the same year, the previous year or the following years, not your salary (EStG § 23 para. 3 sentences 7 and 8).

How much tax it will be

There is no fixed rate: the gain is added to your other taxable income and taxed under the income tax scale (EStG § 32a). Add the solidarity surcharge, where it applies, and church tax if any. A gain of €125,000 on top of €60,000 of taxable income costs an extra €55,992.02 of tax under the 2026 scale, that is 44.8% of the gain.

You enter the gain in the tax return for the year of sale, in form Anlage SO. The calculator also names the first tax-free day.

Special cases

For an inheritance or gift, the acquisition by the predecessor counts for the ten-year period (EStG § 23 para. 1 sentence 3): use his purchase date. Which acquisition costs you can claim is best clarified by a tax adviser.

If only part of the property was lived in yourself, for example in a two-family house, have the case checked: parts of a building that are independent assets are considered separately (EStG § 23 para. 1 sentence 1 no. 1 sentence 2).

Notary, bank and agent

The contract of sale of land needs notarization (BGB § 311b para. 1). The buyer only becomes the owner when agreement (conveyance) and entry in the land register are in place (BGB §§ 873 and 925); before that the tax office must certify that there are no tax objections to the entry (GrEStG § 22). Under GrEStG § 13 no. 1 both parties owe the real estate transfer tax; in the contract the buyer usually bears it.

If a loan with a land charge is still running on the property, the purchase price repays it. The land charge only ends when the bank declares it gives up the right and the land registry deletes it (BGB § 875). If the interest rate is still fixed, you may terminate the loan early if your legitimate interests require it and the payout was at least six months ago; such an interest exists in particular if you want to realize the mortgaged property otherwise. The bank may demand early-repayment compensation for it (BGB § 490 para. 2).

If you alone hired an agent, the agent’s contract needs text form (BGB § 656a). If the buyer is a consumer, an agreement obliging him to pay applies only if you yourself pay at least the same amount; he only has to pay once you have paid and proved your part (BGB §§ 656b and 656d). You or the agent must show the energy certificate to interested parties at the viewing at the latest (GModG § 80 para. 4).