Government wants to reduce additional purchase costs

Home buyers in Germany only pay around a seventh to be able to buy the house. The federal government wants to change that now. The real estate transfer tax is not up for debate.

Whoever buys his house often pays too much - especially just for being allowed to buy.

IReal estate buyers in Germany can hope for relief from the high ancillary costs. “We are currently checking whether the principle of ordering can also be applied to property sales,” said Federal Justice Minister Katarina Barley (SPD).

This means that whoever hired the broker has to bear the brokerage costs. This has already been introduced with the brokerage of rental apartments. “The introduction of this ordering principle was an important step in order to noticeably relieve tenants,” said Barley.

By six to seven percent

Young families in large cities in particular are less and less able to afford rental apartments or houses and are therefore considering buying property in the surrounding area. However, brokerage costs and the property transfer tax to be paid consume a large part of the equity. Last but not least, they rise with the purchase prices.

The brokerage fee in Germany varies between 7.14 and 5.95 percent of the purchase price. In Berlin, Bremen, Hamburg, Hesse and Brandenburg, the buyer pays the commission in full, in the other federal states it is usually shared between buyer and seller.

Tax exemption rejected for real estate transfer tax

An even simpler lever would be the real estate transfer tax, since with this the state itself makes the acquisition of a property more expensive. However, it is a state tax that the federal government cannot decide on alone. Depending on the federal state, the tax rate is between 3.5 (Bavaria and Saxony) and 6.5 percent (Schleswig-Holstein, North Rhine-Westphalia, Saarland, Brandenburg and Thuringia).

The Finance Committee of the Bundestag, however, only rejected an application by the FDP in June to raise an allowance for real estate transfer tax. All other parties had voted against. The FDP wanted to give the federal states the opportunity to set an allowance up to a maximum of 500,000 euros per person.

The reasons for the rejection varied. While the CDU thinks that the countries should be included, the SPD sees too much bureaucracy in this. The Left fundamentally denies a connection between real estate transfer tax and home ownership, while the AfD is in favor of direct home ownership.

Tax reform should rather bring more income

On the contrary, the finance ministers of the federal states even want to close tax loopholes for companies. Up to now it has been possible to transfer up to 95 percent of the shares in a company that owns a property without having to pay real estate transfer tax. This limit is to be reduced to almost 90 percent. In addition, the remaining shares should only be tax-free after ten, and no longer after five yearsn can be purchased.

A reform of these “share deals” was also important to the CDU when the FDP application was rejected. The fact that the reform direction in the real estate transfer tax is apparently leading to more tax revenue can be seen as an indication of a certain reluctance to relieve real estate buyers of this.

In addition to brokerage costs and real estate transfer tax, there are also around 1.5 percent of notary and land registry costs.

Around a seventh are ancillary costs

If a property in Berlin costs 400,000 euros, there are 28,560 euros in brokerage commission for the buyer, as well as 24,000 euros in real estate transfer tax and around 6,000 euros in notary and land registry costs. That is a total of around 58,560 euros, or 14.6 percent of the purchase price. A reduction could therefore effectively increase the purchase opportunities.

Most recently, the Greens had applied in the Bundestag to extend the ordering principle to include real estate acquisition. In most federal states, the brokerage fee is well above the European average, write the Greens in the application for the Bundestag.

The federal government is taking a “broker cuddling course”, criticized Green parliamentary group leader Katrin-Göring-Eckardt. “Brokerage fees have to be paid by those who sell a property, not by the buyers.”