Property-Related Taxes in Germany

Non-resident foreigners are taxed in Germany only on income derived from German sources. Married couples are assessed and taxed separately. Personal income tax is progressive, with rates ranging from 0% to 45%. Rental income is taxed at progressive rates, with full deductibility of income-related expenses and depreciation allowances.

Capital gains from the sale of real estate are exempt if the property has been held for more than ten years. Germany levies an annual municipal property tax (Grundsteuer) and a one-time property transfer tax upon acquisition, with rates varying by federal state. Corporate income is taxed at a combined rate of 15.83%, including the solidarity surcharge.

Total roundtrip transaction costs when buying and selling property typically range between 8.5% and 15%.

Annual Property Tax (Grundsteuer)

Germany levies an annual local property tax on real estate. The tax base is the assessed value of the property. A basic federal rate of 0.35% applies, which is then multiplied by a municipal assessment factor.

The effective tax burden typically ranges between 0.26% and 1% of the assessed property value, depending on the municipality. Municipal multipliers generally range from 280% to 810%. For example, the multiplier is approximately 460% in Frankfurt and around 175% for agricultural and forestry land. 

Property tax is deductible for income tax purposes if the property is used in a trade or business.

Income Tax (Einkommenssteuer)

Income earned by nonresident foreigners is taxed at progressive rates.

Income Tax Rates (2026):

In addition, if an individual is a registered church member, they might be charged an additional 8% to 9% on top of their income tax liability.

Solidarity Surcharge (Solidaritätszuschlag)

In addition to income tax, a solidarity surcharge of 5.5% is levied on the assessed income tax amount, not on taxable income.

Since 2021, the solidarity surcharge has been largely abolished for low- and middle-income earners. It applies only once income tax exceeds the following thresholds:

Rental Income Tax

Rental income is taxed at progressive income tax rates. Property owners may deduct expenses incurred to generate, maintain, and secure rental income.

Depreciation allowances are generally set at 2% per year for existing residential buildings. For newly constructed residential properties, depreciation of 3% per year applies for the first eight years. 

Maintenance and renovation costs exceeding 15% of the purchase price cannot be deducted in the year incurred. Instead, such expenses must be capitalized and added to the depreciable value of the property.

Capital Gains Tax

Capital gains arising from the sale of real estate are exempt from tax if the property has been held for more than ten years.

If the property is sold within ten years of acquisition, capital gains are taxed at the seller’s progressive income tax rate, plus any applicable solidarity surcharge. Acquisition costs and qualifying improvement expenses are deductible when calculating the taxable gain.

Property Transfer Tax (Grunderwerbsteuer)

Property transfer tax is payable upon acquisition of real estate and is levied by the federal states. Rates vary by state, as shown below.

Corporate Taxation

Corporate income is subject to corporate income tax at a rate of 15%. In addition, a solidarity surcharge of 5.5% is levied on the corporate tax amount.

This results in a combined effective corporate tax rate of approximately 15.83%, excluding municipal trade tax.

Property Buying and Selling Costs in Germany