Mortgage in Spain
When buying a property, it is not always possible to pay immediately, therefore, mortgage lending is often used in transactions. Another important plus of mortgage lending is the ability to…

Continue reading →

Wealthy Russian investors in Germany: a Tranio study
In 2017, the company Tranio studied the audience of investors from Russia and other countries of the former USSR, buying in Germany profitable real estate worth from 1 million euros.…

Continue reading →

Parliamentary elections in the UK: how will the results affect the real estate market?
According to the results of the parliamentary elections in Great Britain, none of the parties won enough seats in the House of Commons for an absolute majority. The legislature of…

Continue reading →

Property taxes in Germany

When buying, owning, renting and disposing of real estate in Germany, foreigners pay taxes at the same rates as residents of the country.

Purchase
After the conclusion of the transaction, the buyer pays a one-time tax on transfer of ownership (Grunderwerbsteuer). Depending on the federal state, the rate is 3.5–6.5% of the value of the object specified in the contract of sale. If the property is acquired by the parent, spouse or child of the owner, then he does not pay this tax.

The buyer does not pay transfer tax if he acquires shares or shares of a company that owns real estate under the Share Deal scheme.

The fees of the broker and notary involved in the purchase and sale transaction are subject to value added tax of 19% of the cost of their services.

Possession
Owners pay annual property taxes (Grundsteuer). The tax depends on the type of object, its location, the area of ​​the land and time of construction. On average, apartment owners pay 100–300 euros per year – a relatively small amount compared with other European countries.

The owner is obliged to pay property tax by the end of the calendar year, even if he sold the object during this year. In this case, the buyer usually reimburses the seller the tax paid by him, in proportion to the time of actual ownership of the property.

Rental
When renting the property, the owners pay the income tax: individuals – income tax (Einkommensteuer), legal – corporation tax (Körperschaftssteuer). Income tax is calculated based on the income of the owner at a progressive rate from 14.77 to 47.475%, including a premium in support of solidarity (Solidaritätszuschlag).

For companies that rent real estate and do not carry out any other commercial activity, the income tax rate is fixed: 15.825%, including a premium in support of solidarity.

– What is a premium in support of solidarity?

– These are deductions for the economic rehabilitation of the lands of the former GDR. The surcharge applies to income tax, corporate tax and capital gains tax. Its size is 5.5% of the amount of the mandatory payment of the main tax.

Income tax is charged on the difference between all income received and costs incurred. The latter include purchase expenses, utility payments, management company fees, property tax, loan interest, land tax, depreciation of the building (2-3% of the building value per year).

With the help of competent tax advisors, many investors structure the “entry” of capital into German companies through founders’ loans, which helps to significantly reduce the taxable base and take profits from the dividend tax. In practice, this leads to a reduction in the tax burden on rental business income to almost zero during the first 10–15 years of investment.

Russians who rent real estate in Germany do not have to pay income tax in Russia, because the two countries have an agreement on the avoidance of double taxation.

– Is it true that in Germany the registration of real estate is not on the physical, but on a legal entity helps to optimize taxes?

– Indeed, according to Tranio statistics, buyers of income property worth more than 1 million euros annually save on average 25% of the income tax compared to how they registered the same object for an individual. Also, if a Russian tax resident registers an object and a mortgage on a legal entity, then he does not need to pay a tax on material benefits in Russia.

Sale
The seller of real estate pays capital gains tax (Kapitalertragsteuer), which is a form of income tax. For individuals, it is levied at the income tax rate (14.77 – 47.475%), for legal entities – corporate tax (15.825%). The taxable base is calculated as follows: from the proceeds from the sale of real estate are deducted the costs associated with its acquisition, and depreciation.

Individuals do not pay capital gains tax if more than 10 years have passed between buying and selling real estate, or if the object has been used exclusively for personal residence for at least three years before the sale.

Why to invest in Barcelona value added projects in 2017–2018
Recovering after the crisis, the Spanish economy is regaining lost positions: if in 2009 the GDP growth rate fell to a record low of −3.57%, then from 2012 the figure…

...

Why to invest in Barcelona value added projects in 2017–2018
Recovering after the crisis, the Spanish economy is regaining lost positions: if in 2009 the GDP growth rate fell to a record low of −3.57%, then from 2012 the figure…

...

How blockchain and distributed registries will transform the real estate market
The blockchain technology (English blockchain - “block chain”) has become famous thanks to Bitcoin - the cryptocurrency based on it. In everyday life, the word “blockchain” is also applied to…

...