Last Updated on June 26, 2026
Germany is a modern country with excellent infrastructure, some of the greatest cities in the world, and gorgeous natural beauty. It’s easy to understand why someone may be interested in buying property there.
Foreign nationals and non-residents are permitted to purchase land, property, and freeholdings anywhere within Germany.
Germany is famed for its bureaucracy, and this is especially true for property and real estate. With a little investigation, you can figure out everything you need to know to deal with Germany property taxes.
In this blog, we’ll break down the terminology, nuances, and structure of the taxes you’ll encounter when buying property in Germany.
Key takeaways
- When you buy property in Germany you have to pay property purchase tax ( Grunderwerbsteuer).
- An annual property tax (Grundsteuer) is applied to all property owners.
- The Grundsteuer is a local tax charged in four quarterly installments.
- It is common for landlords to pass these costs onto tenants in a fee called Nebenkosten.
- The local tax multiplier is called Hebesatz and is defined by the location of your property.
What Is the Local Property Tax in Germany?
The local property tax in Germany is called the Grundsteuer. This is an annual tax on real estate ownership. It is paid for by the owners of land, houses, apartments, and commercial properties.
It is collected by the local municipality in a city or town.
It is common for landlords to pass these costs onto their tenants as a fee called the Nebenkosten.
What is Included in Local Taxes?
German local taxes are comprehensive and cover a range of different local services.
These include
- Müllgebühren: The waste collection and disposal service.
- Straßenreinigung: Street cleaning and municipal maintenance service.
- Abwassergebühren: sewage and waste water services.
What is The Tax on Buying a House in Germany?
Germany property transfer tax (Grunderwerbsteuer) applies whenever you buy a house, apartment, or plot of land. It is a one-time tax based on the purchase price and state tax rate
Once paid and after signing the purchase contract you are officially registered as the property’s owner.
How much is property transfer tax in Germany?
The amount taxed depends on the value of the property and what state (bundesland) it is located in. The individual state tax rates are:
| State (Bundesland) | State Tax Rates |
|---|---|
| Baden-Württemberg | 5.0% |
| Bavaria | 3.5% |
| Berlin | 6.0% |
| Brandenburg | 6.5% |
| Bremen | 5.5% |
| Hamburg | 5.5% |
| Hesse | 6.0% |
| Mecklenburg-Western Pomerania | 6.0% |
| Lower Saxony | 5.0% |
| North Rhine-Westphalia | 6.5% |
| Rhineland-Palatinate | 5.0% |
| Saarland | 6.5% |
| Saxony | 5.5% |
| Saxony-Anhalt | 5.0% |
| Schleswig-Holstein | 6.5% |
| Thuringia | 5.0% |
For example, a €400,000 property bought in Berlin, which has a tax rate of 6.0%, would be taxed with the following formula:
€400,000 X 6.0% = €24,000 in land purchase charges.
How are local property taxes calculated?
The annual property tax (Grundsteuer) is paid by the owners of land and real estate in Germany.
The means of calculating this tax was reformed from 2025 onwards. The new system uses property value, land value, the size and use of real estate, and the location.
This is all factored into a basic equation that works out as Value x Tax Rate x municipal multiplier.
Property Tax = Assessed Property Value × Tax Rate × Municipal Multiplier
Who pays local property tax?
The owner of the land and property is responsible for the Grundsteuer property tax. This cost is often passed onto the tenant in the case of residential properties. In Germany this is a common practice and is called “Nebenkosten.”
How often is local property tax paid?
The Grundsteuer property tax is an annual tax. However, it is charged in four quarterly instalments.
Generally, the dates for payment are
- 15 February
- 15 May
- 15 August
- 15 November
The most common payment methods used are direct debit or bank transfer. Some tax offices can even take cash payments.
Are local taxes included in mortgage payments?
The mortgage is an arrangement between the owner and a financial institution such as a bank, though there are related fees and charges none of these are related to the local or federal taxes in Germany.
Non-nationals can still apply for a mortgage but may face higher fees in certain areas. Most mortgage providers in Germany prefer if you have an income stream from within the EU.
Are local taxes based on where you live?
Yes, but not in the way you may think. In some countries taxes can vary by locality or state. Germany is divided into states, known as Bundesland, but they don’t factor into local taxation.
Instead, it is the location in relation to urban or high demand areas that defines your local taxes.
This system is called a local multiplier, called a Hebesatz. A rural area will have a lower multiplier than a town, and a major urban area, like Berlin, will have an even higher multiplier.
This multiplier will be used to figure out your tax bill
Your average property tax will be defined by the value of your property, your tax rate, and the hebesatz multiplier for your area.
Is real estate tax a local tax?
The Grundsteuer property tax is a combination of both local and federal tax rates.
The federal tax rate is called the Steuermesszahl, and is set and applied nationally. This is combined with the property value and the local hebesatz multiplier, which is set by the local authorities.
The grundsteuer property tax is collected and used by the local municipality.
What happens if you don’t pay local property tax?
Germany’s specific taxation schedule can feel complicated to property owners from other countries. This confusion could easily lead to a delayed or missed payment.
If this happens, the first course of action for the tax office is to send you a payment reminder.
If the situation is not rectified then you will be issued a formal demand for payment called a Mahnung.
After this, you will begin to accrue late fees and interest on the amount owed.
If you want to minimize the chance of this happening contact Property Tax International and get a German tax expert to investigate your case and ensure that you are fully tax compliant on time, every time.
Income tax applies if you sell your property within a certain timeframe
In Germany the proceeds from selling property are taxed under income tax (Einkommensteuer).
This applies to both resident and non-resident property owners, however there is some nuance. There is a period of time called a speculation period (Spekulationsfrist). This period lasts ten years from purchase. The period is two years if the property is owner occupied for that period.
Sale of the property during speculation period will apply a tax called the private disposal tax (Veräußerungsgeschäft).
However, if you wait until this period elapses the sale is tax free!
The capital gain tax is calculated by the sale price minus the purchase price minus allowable costs.
- Notary and legal fees
- Estate agent commission
- Renovation costs
- Transfer tax paid at purchase
- Costs associated with the sale (adverts, web hosting, valuations)
How to find your local property tax number?
Your property tax number is called a “Grundsteuernummer”. It is a very important number. It allows the local tax authority to identify your land in their system, correspond with you, prove ownership, and it also links your property to its assessed value. You also need it to pay your property tax and file tax returns!
The sequence of numbers is composed of three parts. A section for the federal state (bundesland), a section for the municipality, and a sequence that identifies the property itself.
When you are issued a property tax notice, you’ll usually find your property number printed on the top of the letterhead. Other places you can find it include purchase documents, and correspondence from the municipality tax office. If you can’t find it, reach out to your local tax office (Finanzamt) and you can retrieve it by submitting your name, property address, or tax ID.
Seek professional advice for local property tax online
The German tax system is complex, comprehensive, and (occasionally) confusing for non-nationals unfamiliar with its nuances.
Compliance is important, and the risk of errors or missed payments can result in fees and penalties.
There is also the additional language barrier, with most German documents written entirely in German.
To make sure that you get it right first time, reach out to us at Property Tax International. We have teams of German-speaking Tax experts who can help you navigate the bureaucracy and ensure you pay your taxes correctly and avail of any available deductions.