If you buy a property in Germany, you have to pay real estate transfer tax.
(Photo: IMAGO/teamwork)
Berlin Income from real estate transfer tax fell drastically this year – with a significant impact on the national budget. In April, the federal states only took in 904 million euros with the real estate transfer tax – that is a third less than in the same month last year, as the current monthly report from the Federal Ministry of Finance shows.
This continues the trend. Overall, the revenue from real estate transfer tax from January to April was 4.3 billion euros, a drop of 33.6 percent compared to the same period last year.
In the course of the year it should only get slightly better, according to the forecast of the tax estimators. They expect around 13 billion euros in income from real estate transfer tax for the year as a whole, which would be almost a quarter less than in 2022. Last year the tax authorities collected 17.1 billion euros in real estate transfer tax, and in 2021 it was even 18.3 billion euros.
If you buy a property in Germany, you have to pay real estate transfer tax. The revenue goes to the federal states alone. You also decide the height. Depending on the federal state, the tax rate is between 3.5 and 6.5 percent and is due on the purchase price. With a purchase price of 500,000 euros, the buyer has to pay up to 32,500 euros to the tax authorities.
The federal states have been setting the tax rate since 2006. The federal government previously determined the amount – the tax rate at that time was a uniform 3.5 percent. Since countries have been allowed to set the percentage, some have increased it significantly.
Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein and Thuringia currently form the top group with 6.5 percent. Only Bavaria has remained at the 3.5 percent it used to have. Hamburg increased the tax rate to 5.5 percent at the beginning of the year.
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The real estate transfer tax is often criticized. The high burden is considered a hurdle for people who want to buy a property. Federal Finance Minister Christian Lindner (FDP) dared to make a move last summer and proposed making the real estate transfer tax more flexible.
For first-time buyers and families, there could be a second, lower tax rate that could go all the way to zero. However, the idea met with resistance in many federal states. They fear for their income.
In German residential construction, more and more projects are being canceled or put on hold. This is due, among other things, to supply bottlenecks, sharply rising material and energy costs, expensive financing and a lack of construction and trade capacities. Many people hardly see themselves in a position to buy their own home.
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According to figures from the Federal Statistical Office, 295,300 residential units were completed last year, a drop of 1,900 apartments compared to 2021. At the same time, this is far from the 400,000 apartments that Federal Building Minister Klara Geywitz (SPD) is aiming for annually. The construction industry also points out that in 2022 almost everything that was still under construction was completed. For the current year, the German Construction Industry Association (HDB) expects “at best” 250,000 new apartments.
If housing construction is actually close to zero soon, then there will be no investments in which the state can participate through taxes – and at the same time new apartments are still a long way off. ZIA President Andreas Mattner
The Central Association of the Real Estate Industry (ZIA) explained that in view of the already dramatic increases in interest rates and costs, high tax burdens such as the real estate transfer tax additionally increased the deterrent effect for investors. ZIA President Andreas Mattner therefore called again on Friday for the real estate transfer tax rates to be reduced. “If housing construction actually goes to zero soon, then there will be no investments in which the state can participate through taxes – and at the same time new apartments are still a long way off,” warned Mattner.
Mattner suggested a “large-volume federal loan program with an interest rate of two percent” as a “very important signal”. “Because not only with the land transfer tax, but also with the sales tax, which is incurred through construction activity, the income rushes into the basement.”
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