The real estate transfer tax is a state tax. The Länder decide on the amount of the tax rate and can also pass on the revenue to the respective municipality in which a property was sold. Thus, the land transfer tax flows either into the budget of the country or the respective municipality or municipality.
The land transfer tax is the one hand, the most important tax of the countries, on the other hand, the only tax, the amount of which the countries can set autonomously. It has not always been that way. Until 2006, a nationwide uniform tax rate of 3.5 percent applied.
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For real estate buyers, it is of course important to know how high the real estate transfer tax when buying a property fails. The following table shows the amount of tax rates of the respective federal states:
The amount of land transfer tax per province 2019
In addition to the different tax rates, this table also shows a different situation. Those who do not live in the heart of a federal state, but in the border area to another federal state, should think about possibly further a few kilometers to lower the land transfer tax.
The increasing number of real estate purchases led some states to hold their hands in this regard a little further than before. A series of land transfer tax adjustments was the result. The following map shows the amount of land transfer tax in the respective German federal states and when it was last adjusted.
Thus, the world quotes in its issue of 27.8.2015, the owner burn, which assumed even then that the countries “continue to turn to the tax screw.” Since 2006, when the nationwide rate of 3.50 percent was repealed, many adjustments were made across all federal states. So far, however, only upwards. Exceptions are Bavaria and Saxony. In these federal states, the original land transfer tax rate of only 3.50 percent is still charged.
Property transfer tax rates
In Germany, homebuyers and home builders pay a land transfer tax, depending on the state in which the property is located. The amount of the tax rate is a matter for the Länder. In other EU and US countries things are handled differently:
In most of the European countries of our infographic, there are uniform tax rates, regardless of the price of the property and the region in which the property is located. If the tax rates are compared, it shows that Germany ranks third among the highest land acquisition tax rates.
In the US, on the other hand, both factors are important, ie the price and the situation play the decisive role in combination.
Current property tax rates
There are two rates of levy on the property tax:
- Property tax A (for agricultural land)
- Property tax B (for non-agricultural land)
The following interactive map of the Federal Statistical Office provides an overview of the current property tax rates for all municipalities in Germany. You can select the tax type in the upper area and then move the mouse over desired regions to display the current property tax rates.
When does the obligation to pay arise?
The obligation to pay land transfer tax is triggered when a purchaser acquires at least 95 percent of a property. Basis of assessment is basically the purchase price. Companies often circumvent the payment of land transfer tax by having two buyers, one of whom buys 94.9 percent and the other 5.1 percent of the property under a share deal *. This construct would have escaped the state of Berlin almost 90 million euros in revenue. However, the investor has subsequently acknowledged that he will pay land transfer tax for the acquisition of the area .
No land tax, on the other hand, is payable if the transfer of ownership takes place through donation or inheritance. As part of a foreclosure auction, the land purchase rate is calculated on the highest bid.
How can acquirers save land transfer tax?
Hardly a private acquirer will develop a construct, as was the case in Berlin. Nevertheless, the question arises whether private buyers have the opportunity to save land transfer tax.
In principle, when acquiring an existing property, all items that are not originally part of the property can be deducted from the taxable purchase price. These include, for example, fitted kitchens, fitted wardrobes, awnings or solar cells on the roof. Carpets or parquet, on the other hand, are excluded from the deduction.
With new buildings it was possible until some time ago to conclude two separate contracts with the developer. On the one hand, it is about the purchase of real property subject to the purchase of real estate, on the other hand, the contract for the construction of real estate without a real estate transfer.
However, the tax authorities have now put a stop to this approach. If it is not clear by a corresponding time interval that land purchase and house construction are directly linked, the tax offices calculate the property tax to the full amount.
If a potential home builder acquires the property and begins construction only one year later, it can be assumed that there will be a corresponding time interval. The same is the case when the property is acquired and the house is then built as an architect.
Threatens further increase of land purchase tax costs?
After tax rates have remained unchanged since 2016, there is a threat of a renewed increase in the cost of purchasing real estate. This concern does not relate to the tax rate, but to the taxable amount.
In 2016, the Federal Finance Court decided that from now on the purchase of a foreclosed condominium, the maintenance costs may not be deducted from the maximum bid (II R 27/14). In other words, this means that these reserves are also burdened with land transfer tax, which results in a larger cost for the homebuyer. Earlier, back in the 1990s, this instance confirmed that such reserves are non-transferable (II R 20/89).
However, the BGH decision of 2016 did not include the tax treatment of maintenance reserves for the purchase of real estate that does not originate from foreclosure. This prompted the Cologne financial judge to go against it in revision (5 K 2297/16). Their justification: Maintenance reserves are part of the property of the condominium community and can not be transferred to the individual buyer.