Incidental purchase costs - what you also have to pay when buying a property

They are simply part of buying a property: Incidental purchase costs. This makes it all the more important to take them into account in your personal financial planning right from the start. In this article, you will find out which items are involved and what costs you can expect.

The most important things to know first:

1. Every property purchase incurs land transfer tax, court costs and notary fees for buyers.
2. The estate agent's commission is usually split between the seller and buyer.
3. Additional purchase costs are usually not part of financing.

Additional costs: unavoidable - but plannable.

Whether prospective buyers can afford a property depends primarily on the purchase price. Generally speaking, the higher it is, the more incidental purchase costs are due, as these are calculated on the basis of the purchase price. The region in which the desired property is located is also decisive. As a rule, the ancillary purchase costs are between 8 and 15 percent of the purchase price, depending on the federal state.

The process of purchasing a property is clearly regulated in Germany. Notaries, tax offices and courts are always involved - and this is always associated with corresponding costs for buyers. The role of the notary is obvious: to protect both parties in what is usually a very cost-intensive property purchase. An important point: the purchase contract only becomes legally binding once it has been notarized. The duties of a notary also include all entries in the land register. He charges fees for this which, according to the German Court and Notary Fees Act (GNotK), amount to approx. 0.5 to 1% of the purchase price.

In addition, approx. 0.5% of the purchase price is charged for the activities of the land registry. Once the purchase of the house, apartment or plot of land has been completed, the time has come for the respective tax office in the federal state. The assessment for land transfer tax amounts to approx. 3.5 to 6.5 percent of the purchase price - depending on the applicable tax rates within the federal states.

Conclusion: Notary and court costs are unavoidable for buyers, but they should also be seen as money well invested in legal protection. Incidentally, there are a few exceptions for exemption from real estate transfer tax: it does not apply to purchase prices of less than 2,500 euros, gifts, sales between spouses or even family lines (parents, children, grandchildren).

Freely negotiable: the estate agent's commission.

While buyers must bear the notary and court costs as well as the land transfer tax alone, the estate agent's commission can be split between the parties to the purchase agreement. The decision as to whether to commission an estate agent at all is made by the seller. Not every property purchase is therefore associated with costs for an estate agent. A new regulation for owner-occupied single-family homes and condominiums from 2020 stipulates that sellers must pay at least half.

This should significantly reduce the burden on buyers when it comes to ancillary costs. But that's not all: as a rule, both parties benefit from estate agent services - and this new regulation is also intended to reflect this. Expressed in figures, the costs for the estate agent's commission are around 6.5% of the purchase price, of which, as mentioned, buyers only pay half

Please feel free to contact us if you have any questions about the new regulation of the estate agent's commission. Click here to go directly to the contact form.

Our tips for you:

• Appraisals, renovation and relocation costs as well as major necessary investments for kitchen fittings and sanitary facilities are also considered incidental purchase costs and should be taken into account in your financial planning.
• Your equity should at least cover the ancillary purchase costs in the course of real estate financing. "Full financing" (also known as "110% financing") is rather unusual on the part of the bank.
• For rented or commercially used properties, talk to your tax advisor about whether some ancillary purchase costs may be tax-deductible.

You can also use our incidental costs calculator at www.vp-finance.de/ to get an overview of the costs incurred in addition to the purchase price. Just a few entries are all it takes - and you have an initial indication of the total expected ancillary costs.

All federal states at a glance

Bavaria flag

Bavaria

Purchase Berlin

Brand Brandenburg

Bremen flag

Buying Hamburg

Flag of Hesse

Purchase costs Mecklenburg-Vorpommern

Flag of Lower Saxony

Purchase costs North Rhine-Westphalia

Purchase costs Rhineland-Palatinate

Purchase Saarland

Purchase Saxony-Anhalt

Purchase Saxony

Purchase costs Schleswig-Holstein

Purchase costs Thuringia