What are the capital gains tax rules when selling property in Germany?

You do not pay capital gains tax if:

• You’ve owned the property for more than 10 years, regardless of whether you lived in it or rented it out.
• You’ve lived in the property yourself for the entire ownership period, or
• You’ve lived in it during the year of sale and the two preceding years.

Otherwise, any profit is taxed at your personal income tax rate.

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• The holding period starts from the date of purchase in the notary contract.
• You can sell without paying capital gains tax from the day after the 10th anniversary.
• The rule applies to both residents and non-residents.

Example:
If you purchased on 15 July 2015, you can sell tax-free from 16 July 2025.

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Even if you haven’t owned the property for 10 years, you can sell tax-free if:

• It has been your main residence for the entire time, or
• You lived in it in the year you sell and the two years before.

Example:
You bought in 2022, lived in the property from 2023 to 2025, and sold in 2025 : the sale would be exempt.

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The gain is:

• Sale price
  minus
• Purchase price (including purchase fees like notary and transfer tax)
  minus
• Selling costs (agent commission, legal fees, renovations done shortly before sale)

Example:
Purchase price: €350,000
Purchase fees: €38,000
Selling price: €450,000
Selling costs: €15,000
Taxable gain: €47,000

This €47,000 would be added to your taxable income in the year of sale.

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• If you’ve rented out the property at any time during ownership and you sell within 10 years, the full gain is taxable.
• Renovations done within the first 3 years that exceed 15% of the purchase price may be treated as acquisition costs, impacting your calculation.

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Mistake 1: Miscounting the 10 years
It’s not just calendar years : the exact date matters.

Mistake 2: Confusing exemption rules
Simply living in the property before sale is not always enough : the timing must match the official exemption periods.

Mistake 3: Forgetting to deduct allowable costs
Agent fees, notary costs, and certain renovations can reduce your taxable gain.

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• Non-residents still owe German capital gains tax on German property sales.
• Double taxation agreements may allow you to credit German tax paid against tax in your home country.
• Some countries do not recognise the German 10-year exemption, so check with a cross-border tax advisor.

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• What are the tax implications of owning property in Germany?
• What additional fees and taxes will I pay when buying property in Germany?
• Should I rent or buy in Germany?

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1. Check your exact purchase date to determine when you can sell tax-free.
2. Gather documentation of all purchase and selling costs for deduction purposes.
3. Plan your sale timing strategically to minimise or avoid capital gains tax.
4. Use our Income Tax Calculator to estimate the impact on your taxable income.

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With good planning, many property sales in Germany can be structured to avoid capital gains tax entirely : especially if you understand the 10-year rule and residency exemptions.

⚠️ IMPORTANT LEGAL DISCLAIMER:

This content is for educational and informational purposes only and does not constitute financial, tax, legal, or investment advice. You should not rely on this information as a substitute for, nor does it replace, professional financial or tax advice. Always consult with qualified professionals (tax advisors, financial planners, lawyers) before making any financial decisions or taking any actions based on this information.

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Disclaimer: This is general information and may differ for individual cases. Learn more about financial planning with Financemate in a discovery call.