What are the additional Acquisition costs?

Show notes

When financing real estate purchases in Germany there are additional acquisition costs, known as "Kaufnebenkosten," that are not typically covered by banks. These costs can range from 10-15% of the purchase price. The key components of these additional costs are outlined as follows:

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Real Estate Transfer Tax: This is a state-imposed tax, ranging from 3.5% to 6.5% of the purchase price. If the intention is to purchase land for future construction, the tax is usually applicable only to the land itself, not the subsequently built house. Exceptions include cases where there's a binding agreement with a construction company or a designated building plan. Certain exemptions exist, such as acquiring property from close relatives, through gift or inheritance, or if the property's value is below 2,500 Euros.

Notary and Land Registry Costs: In Germany, property transactions must be notarized, and ownership transfers are recorded in the land registry. These costs typically amount to around 2% of the purchase price.

Broker's Fee: If a real estate agent is involved, a broker's fee is incurred, ranging from 3-7% of the purchase price. The specific amount is negotiable, and parties can agree to split the fee or have the party nominating the realtor pay it in full. As of 2020, the maximum a buyer has to pay is 50% of the fees if they didn't hire the realtor directly.

It obviously is important to be aware of these additional costs, even if opting for 100% financing. Proper budgeting is crucial when planning a property purchase. The podcast also mentions that German terms related to the content can be found in the episode description.