Lower property prices, the convenience of nearby German cities and several other advantages make buying property across the border an appealing choice for many Luxembourg buyers. Still, before making that move, it’s important to understand how the property taxes in Germany work.
Buying a home in Germany isn’t just about the purchase price. There are extra costs like the one-time property transfer tax and the yearly property tax that every buyer has to account for. These expenses can add up quickly. If you live in Luxembourg and are considering investing or moving to Germany, knowing what to expect will help you plan your budget and avoid surprises later.
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What Taxes Do You Pay When Buying Property in Germany?
When you are buying a home in Germany, the purchase price is actually the only beginning. The property purchase costs in Germany also include several taxes and fees that can make a big difference to your budget. Here is what you can expect.
Real Estate Transfer Tax
One of Germany’s biggest upfront costs is the real estate transfer tax (Grunderwerbsteuer). It is a one time charge, calculated as a percentage of the purchase price. The exact rate depends on the state and currently falls between 3.5% and 6.5%.
Lowest rate: Bavaria (3.5%)
Mid-range: Baden-Württemberg, Bremen, Lower Saxony, Rhineland-Palatinate, Saxony-Anhalt, Thuringia (5.0%)
Higher rates: Hamburg and Saxony (5.5%), Berlin, Hesse, Mecklenburg-Western Pomerania (6.0%)
Highest rate: Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein (6.5%)
This tax is usually paid shortly after signing the contract. The notary won’t complete the registration in the land register until the payment has been made. If you are buying from Luxembourg or France, double-check the state’s rate.
Notary & Land Registry Fees
In Germany, every property sale must go through a notary. The notary prepares and certifies the contract, verifies ownership, and finally ensures the transaction is recorded in the land register.
The notary fees usually amount to 1%–1.5% of the purchase price, while land registry fees add about 0.5%. Together, they come to around 1.5%–2% of the property price. These fees guarantee that your ownership is legally secure.
Real Estate Agent Fees
If an estate agent is involved, their commission will be part of the costs too. In most cases, estate agent fees in Germany range from 3% to 4% of the purchase price, plus 19% VAT.
Also read: How to Buy a House in Germany as a Luxembourg Resident
Since December 2020, the law requires that buyers and sellers split this fee equally for houses and apartments. That means you will typically be responsible for half of the total commission.
So, does Germany have property taxes? Yes. And do you pay taxes for owning a house in Germany? Yes, as well. At the time of purchase, you will face the transfer tax, notary and registry fees, and possibly an agent’s commission.
Being aware of these costs before your property purchase will help you budget more and avoid surprises after.
Annual Property Ownership Taxes in Germany
When you buy property in Germany, the costs actually don’t end with the purchase. Every owner also needs to pay an annual property tax, which is known as Grundsteuer. It is charged by the local municipality and applies to all property owners.
The system was updated in 2025 because the old valuations were decades out of date. Now the tax is based on three things: the property’s assessed value, a federal base rate, and a multiplier set by each town or city.
The amount varies widely depending on where the property is. In many areas, it comes to between 0.26% and 1% of the property’s value each year. Smaller towns are usually on the lower end, while bigger cities with higher multipliers, like Frankfurt or Munich, can be a little more expensive.
For buyers coming from Luxembourg, this annual cost may not seem huge compared to the purchase taxes and fees. But it is a recurring expense, and building it into your budget early makes ownership easier to manage over the long run.
Down Payments and Closing Costs in Germany
When Luxembourg residents look into buying property in Germany, the first big step is usually the down payment. Most banks expect foreign buyers to put down between 20% and 30% of the property’s value.
If you are not an EU resident, the amount can climb to 30% or even 40%. For EU citizens with a stable income and residency, the requirements can be lighter, and in rare cases, some banks may even finance close to the full purchase price.
Lenders also pay close attention to how much equity you can contribute. Buyers who are not taxed in Germany are usually limited to borrowing around 60% of the property’s value. That means you need to cover the other 40% by yourself, along with the extra fees that come with the purchase. Having a steady income, a solid credit record, and sometimes even a German bank account can make approval much smoother.
On top of the down payment, you will need to plan for closing costs. These usually add another 8% to 15% to the purchase price. They include the real estate transfer tax, notary and land registry fees, and estate agent commission if one is involved. As a rough guide, notary and registration come to around 1.5% to 2% of the price, while agent fees range from 3% to 4% plus VAT, typically split between buyer and seller.
German mortgages also work a little differently from those in some other countries. The loan terms often stretch over 20 to 30 years, and fixed interest rates usually range from 3.5% and 4.5%.
For Luxembourg buyers, this offers the opportunity to secure stable payments, as long as you factor in both the upfront equity and the ongoing purchase costs when planning your budget.
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Taxes After Buying Property in Germany
Once you are a property owner in Germany, there are still several taxes to keep in mind. The most common is the annual property tax (Grundsteuer), which we already covered earlier in this guide. It’s a recurring cost that every owner pays to the local municipality.
If you choose to rent out your home, the rental income is taxable in Germany. Even if you live abroad, you are required to file a German tax return. Some expenses, such as mortgage interest or repair costs, can be deducted, but non-residents don’t receive all the same allowances that apply to residents.
Selling the property can also trigger taxes. If sold within ten years of purchase, any profit is taxed as income. The only exception is if the home has been your main residence for at least two full years, in that case, the sale is usually tax-free.
Some municipalities may also apply smaller service fees or local charges. These are usually small, but still need to be included in your planning as a long-term property owner.
For Luxembourg buyers, it’s worth preparing for these ongoing costs early. They may not be as heavy as the upfront purchase fees, but they are part of the real cost of owning a home in Germany.
How Smart Finance Can Support You
Purchasing a property in Germany from Luxembourg is exciting, but it’s also a little bit confusing. Transfer taxes, yearly property taxes, and closing costs all add up, and it is not always easy to know what to expect. Planning ahead is the best way to stay prepared and avoid unwelcome surprises.
At Smart Finance, we understand the challenges because we work with buyers like you every day. Our role is to take away the stress, explain things in simple language, and guide you through each step from arranging your mortgage to making sure you are ready for the taxes that come with owning a home. With the right support, buying in Germany feels less like a hurdle and more like an exciting step toward your future.
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