Costs & taxes in real estate buying and selling: What owners and buyers really have to pay

In addition to the purchase price or selling proceeds, there are numerous ancillary costs and tax obligations in real estate transactions. Knowing these items and planning correctly avoids unpleasant surprises and can often save money. This article explains clearly what costs buyers and sellers can expect, what tax pitfalls there are — such as speculation tax — and provides practical saving tips.

Overview: Who pays what — Buyer vs. Seller?

In short, buyers and sellers bear different types of costs. Some items are negotiable (e.g. broker's commission), others are legally regulated (e.g. real estate transfer tax, notary fees). Here is an overview of the most important positions:

• Typical for buyers:
• • Real estate transfer tax
  • Notary and land registry costs
  • Broker's commission (partly)
  • Financing costs (processing fees, interest)
  • Moving costs, renovation after purchase
• Typical for sellers:
• • Broker's commission (if contractually agreed)
  • Possibly renovation or refurbishment costs before sale
  • Costs for energy certificate, exposé, photos, home staging
  • Tax burdens (e.g. speculation tax for short ownership periods)

Detailed breakdown of acquisition costs (for buyers)

Real estate transfer tax

The real estate transfer tax is a one-time state tax levied on the purchase of land or real estate. The tax rate varies depending on the state (in Germany currently between approximately 3.5% and 6.5% of the purchase price). Important: The exact amount has a significant impact on the total burden — include the tax in your financing planning.

Notary and land registry costs

Notarization of the purchase contract and entry in the land registry are mandatory. The fees are based on the fee schedule and typically amount to about 1.0–1.5 % of the purchase price together. Without these steps, the transfer of ownership is not legally valid.

Broker's commission

Since a change in the law, private real estate sales often involve a split of the commission between buyer and seller — in many cases, the buyer pays 50% of the total commission, but the details depend on the agreement and the region. Commission rates are usually between 3% and 7% of the purchase price incl. VAT. Tip: Carefully review the broker's contract and negotiate the commission or the split if necessary.

Financing costs and other items

Bank fees, commitment interest, valuations or appraisals as well as the cost of a residential building insurance (from the transfer of benefits and burdens) are part of the financing calculation. Include a buffer for these items in your budget planning.

Detailed breakdown of selling costs (for sellers)

Broker's commission

Depending on the agreement, the seller (partially) bears the commission. Pay attention to whether the commission is only due upon success (after sale) and whether the agreed rate is market standard.

Preparation costs: Energy certificate, exposé, photos, home staging

A good appearance costs: Energy certificate (legally required), high-quality photos, exposé creation, possibly home staging or minor renovations. These investments often increase sales proceeds and shorten the marketing period.

Tax aspects of the sale: Speculation tax & real estate gain

Important for sellers is the question of whether the capital gain is subject to taxation. Private capital gains are generally subject to tax according to § 23 EStG if less than ten years have passed between acquisition and sale. Exceptions: If the property was exclusively used for residential purposes in the year of sale and in the two preceding years, usually no speculation tax is due. Caution is advised with rented properties.

Practical explanation of speculation tax

When is it due?

• Sale within ten years of purchase — generally taxable (for private ownership).
• Exception for owner-occupied property (see above).
• The decisive factor is the capital gain: Sale price minus acquisition costs and deductible advertising costs (e.g. broker, notary, modernization costs under certain conditions).

Calculation example (simplified)

Purchase price: 300,000 €
Selling price after 5 years: 350,000 €
Deductible costs (notary, broker, modernizations): 20,000 €
Capital gain: 30,000 € (taxable, within the scope of personal income tax)

Tip: Document all invoices and receipts for modernizations — they can have a tax-mitigating effect when determining profits.

Tax considerations for investors and landlords

For real estate investors, the following are important for tax purposes: Depreciation (AfA), advertising costs (e.g. interest on debt) and potential losses. When selling a rented property, the ten-year speculation period often applies. In addition: Commercial real estate trading can become tax-relevant with frequent trading — this has other tax consequences.

Saving tips and cost reduction strategies

For buyers

• Include real estate transfer tax in the financing: Don't cut corners in the wrong place — otherwise, you risk a liquidity squeeze.
• Negotiate the broker's commission: Especially in high-demand situations, brokers are more likely to be in a negotiating position — clarify the split before signing the contract.
• Use funding programs: KfW and state funding for energy-efficient construction/renovation reduce effective costs.
• Get comparative offers from banks: Interest rates and fees vary widely — get multiple quotes.

For sellers

• Small investments with high impact: Paint neutrally, tidy up, have good photos taken — home staging can pay off.
• Check tax deadlines: If possible, adjust the timing of the sale to the ten-year period to avoid speculation tax.
• Use brokers strategically: An experienced broker often achieves a higher selling price, offsetting the commission through the additional proceeds.

Don't overlook important formalities & deadlines

• Notarial certification: Without it, there is no legitimate transfer of ownership.
• Payment of real estate transfer tax: Legally, consider before entry in the land register — often, a tax assessment/receipt must be presented.
• Check deadlines for tax-free use of owner-occupied properties (three years of exclusive use rule).
• Keep records and receipts: For possible inspections by the tax office or in case of later disputes.

Conclusion — a good plan avoids surprises

Costs and taxes are a central part of every real estate decision. Both sides — buyers and sellers — should honestly include all items in the calculation from the beginning. Early coordination with a notary, tax advisor, and possibly an experienced broker helps optimize costs and avoid tax risks.