Additional costs when buying a property

Despite high prices, inflation, and rising interest rates, many people long for their own home. It's especially important right now not to focus solely on the price of the property. Additional costs must be factored in when calculating whether you can afford to buy a property, if you want to avoid unpleasant surprises.

Buying a property incurs taxes and fees that banks are generally unwilling to finance. Instead, these must be paid from the buyer's equity. These include property transfer tax and notary fees. If the seller does not cover the entire real estate agent's commission, the buyer must pay half. The amount of taxes, fees, and agent commissions is calculated as a percentage of the purchase price.

Furthermore, single-family and two-family homes are subject to mandatory renovations when they change ownership. If the property you wish to purchase does not meet the required energy standards, you will also be responsible for the renovation costs. However, this will reduce the purchase price of the property.

What are the additional purchase costs?

The notary fees and land registry entry fees together amount to approximately two percent of the purchase price. The amount of real estate transfer tax depends on the respective federal state. It can range from 3.5 to 6.5 percent of the purchase price. In Saxony and Bavaria, it is lowest at 3.5 percent. In North Rhine-Westphalia, Brandenburg, Schleswig-Holstein, Saarland, and Thuringia, on the other hand, it is highest at 6.5 percent. All other federal states fall in between.

The amount of the real estate agent's commission can, in principle, be freely negotiated. Two points are important here. First, the buyer and seller pay the same amount. Second, it may not exceed 3.57 percent of the purchase price.

How are ancillary purchase costs calculated?

For a property costing €300,000, notary fees and land registry entry can amount to up to €6,000. With a 6.5% real estate transfer tax, this adds up to €19,500. The real estate agent's commission in this case can be as high as €10,710. All told, this brings the total to €36,210, which is 12.07% of the purchase price.

Calculate closing costs early on

Since banks typically require you to cover the closing costs of a property purchase from your own capital, you need to consider this from the outset. A reputable local real estate agent can advise you on how much equity you should have available.

Are you looking for a property that fits your budget? Contact us! We'd be happy to answer all your questions.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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