Buying a Home in Germany: Purchase Costs, Notary and Land Register

What you will learn

• Which purchase costs (Kaufnebenkosten) come on top of the price in Germany.
• How real estate transfer tax (Grunderwerbsteuer) differs between federal states.
• The role of the notary and the step-by-step purchase process.
• How to read the main sections of the land register (Grundbuch).

This lesson is general orientation only. Rules and rates can change; check the current rules and, for your own case, ask a notary or a Steuerberater (tax adviser).

Explanation

Purchase costs (Kaufnebenkosten)

• Grunderwerbsteuer (real estate transfer tax): each federal state sets its own rate. At the time of writing the rates range from 3.5% (Bavaria) to 6.5% (for example North Rhine-Westphalia, Brandenburg, Saarland, Schleswig-Holstein). It is charged on the purchase price.
• Notary and land register fees: notary fees are fixed by law (the Gerichts- und Notarkostengesetz), so they do not depend on which notary you choose. Together with the land register court fees, a common rule of thumb is about 1.5% to 2% of the price, depending on the price and on whether a mortgage charge is registered.
• Broker commission (Maklerprovision): not fixed by law and negotiable. For flats and single-family houses bought by consumers, a rule in force since December 2020 (§ 656c BGB, German Civil Code) means the buyer usually pays at most half of the total commission. If there is no broker, this cost disappears.

Banks often expect the buyer to pay these costs from their own money, because they add nothing to the value of the property that secures the loan.

The purchase process

1. Financing commitment: get a binding loan offer before signing anything at the notary (lesson 3).
2. Draft contract: the notary prepares the purchase contract. For a consumer, the draft should normally be provided at least two weeks before the signing appointment, so you have time to check it.
3. Notarisation (Beurkundung): a property purchase contract is only valid if a notary reads it out and both parties sign it. The notary is neutral and must explain the contract, but does not check whether the price is fair or the building is in good condition.
4. Priority notice (Auflassungsvormerkung): the notary applies for an entry in the land register that reserves the property for the buyer, so the seller cannot sell it twice or burden it with new debts.
5. Payment: the buyer pays only after the notary confirms that the agreed conditions are met (the Fälligkeitsmitteilung).
6. Transfer tax and clearance: the tax office sends the Grunderwerbsteuer assessment. After payment it issues a clearance certificate (Unbedenklichkeitsbescheinigung).
7. Change of owner: only then is the buyer entered as the new owner in the land register.

Reading the land register (Grundbuch)

• Inventory (Bestandsverzeichnis): plot number, location and size.
• Section I: the owner.
• Section II: burdens and restrictions, for example rights of way, a lifelong right of residence or usufruct (Nießbrauch), and priority notices.
• Section III: land charges (Grundschulden) and mortgages that secure loans.

An entry in Section II can strongly reduce what you can do with the property. Ask the notary to explain every entry before you sign. For a flat, also read the declaration of division (Teilungserklärung), the minutes of recent owners' meetings and the level of the maintenance reserve.

Worked example

Hypothetical example: a flat costs €350,000. Assumptions: notary and land register together 2% of the price; buyer's broker share 3.57% (including VAT). Excluded: moving costs, renovation, bank fees, valuation fees.

The same flat costs about €10,500 more in purchase costs in North Rhine-Westphalia. These costs are lost money if you sell soon: the property value has to rise by roughly this amount just to get back to zero.

Common mistake

Practice activity

A house in Berlin (Grunderwerbsteuer 6.0% at the time of writing) costs €280,000. There is no broker. Notary and land register fees are assumed at 1.8%. The bank will lend 90% of the price. Calculate (a) total purchase costs in euros and as a percentage, and (b) how much of your own money you need in total.

Key takeaways

• German purchase costs are commonly about 7% to 13% of the price, driven mainly by the state's transfer tax and any broker.
• A property contract is valid only when notarised; the notary is neutral and does not judge the deal.
• The priority notice protects the buyer between signing and the change of owner.
• Read Sections II and III of the land register before signing.

Next step

The next lesson explains how a German mortgage works: fixed-rate periods, repayment rates and the total cost of the loan.