The federal government actually wants to examine an allowance for the real estate transfer tax. The building societies do not think this is a bad idea, but rather recommend a standardization of tax rates at a lower level.
AIn the face of rising rents and house prices, the federal government has set itself the goal of promoting home ownership. A first step towards this was the introduction of the child benefit. Potential house buyers still have to wait for further measures that are already in the coalition agreement. This includes, among other things, an exemption from the real estate transfer tax in the event that residential property is acquired for the first time.
The coalition wanted to examine this for itself. The Landesbausparkassen have now examined it in cooperation with the real estate research institute Empirica to determine what effect such an allowance could have.
The study came to the conclusion that at the given tax rates and the respective property price level, a comparatively low tax exemption of 100,000 euros could help 6 percent more young households to acquire a property for the first time. A tax exemption – similar to Baukindergeld – would have very different effects regionally.
Depending on the tax rate and property prices
The researchers include tenant households between the ages of 30 and 44 who have both sufficient equity (at least 25 percent of the purchase price plus ancillary costs) and sufficient income (income burden from interest and repayment maximum 35 percent) to be among the “natural first-time buyers” to be able to afford a customary property. 291,000 households in Germany currently meet these requirements. The tax allowance would add another 18,400 households.
Naturally, the relief is greatest where the real estate transfer tax is highest. In federal states with high tax rates between 6 and 6.5 percent, the additional potential grows by at least 7 percent, in countries with lower tax rates (3.5 percent) only by 4 percent. The effect of the exemption also depends to a large extent on the regional price level. The tax exemption would therefore have a disproportionate effect in regions with low property prices. In economically strong regions with high purchase prices, however, it would be less important.
Regionally, this would have the greatest impact in the eastern federal states and Saarland, above all in the western and eastern districts of Thuringia as well as in Saalfeld-Rudolstadt, Sonneberg and the Brandenburg districts of Prignitz and Oberspreewald-Lausitz.
Due to the heterogeneous real estate market in Germany, where regions are shrinking and others are extremely expensive, a uniform allowance must always have a distorting effect. Analogous to the regional distribution effects of the child benefit, it favors comparatively stronger regions outside of the no longer affordable large cities and metropolitan areas. If this is politically desired, for example to curb the migration to the metropolitan areas, the allowances could be useful. In order to increase the relief effect in growth regions, phased allowances would have to be considered, but this would immediately increase the complexity.
A higher allowance of 200,000 euros would almost double the number of additional potential first-time acquirers with similar, but not quite as pronounced distribution effects as the allowance of 100,000 euros. In low-price regions, an allowance of 200,000 euros would in many cases be equivalent to the abolition of the real estate transfer tax.
The state building societies therefore recommend a return to a nationwide uniform taxation of the acquisition of land. A property transfer tax rate of around 3 percent would allow as many households to purchase a property for the first time as the tax exemption of 100,000 euros. These would then be distributed relatively more evenly across region, district and city types. But Bavaria and Saxony would hardly benefit from this because of their already low property transfer tax rate of 3.5 percent.
Overall, a lowering of the high ancillary acquisition costs by relieving the real estate transfer tax is more important than ever. Not only the increases in real estate transfer tax by up to 86 percent in many federal states in recent years have contributed to the high costs, but also the rapid rise in real estate prices. The equity capital required for the acquisition did not grow at the same pace. As a result, the real estate transfer tax not only represents an obstacle to the accumulation of wealth in less affluent households, but also burdens new construction as a whole.