Acquisition process

Acquisition - In real estate law, an acquisition refers to the legal process by which ownership of or a right to a property is transferred to another person. Under the Real Estate Transfer Tax Act (GrEStG), the acquisition transaction constitutes the taxable event: Any transfer of ownership of a domestic property, whether for consideration or free of charge, generally triggers real estate transfer tax. The term encompasses not only the classic purchase but also exchange, the highest bid at a foreclosure auction, contribution to a corporation, and certain transactions under corporate law.

Taxable Acquisition Transactions Under the GrEStG

The Real Estate Transfer Tax Act (GrEStG) exhaustively defines in § 1 GrEStG which acquisition transactions are subject to real estate transfer tax:

Traditional Acquisition Transactions (§ 1 (1) GrEStG):

• Purchase agreement for domestic real property
• Exchange agreement involving real property
• Highest bid in foreclosure proceedings
• Acquisition through expropriation
• Assignment of the claim to transfer of ownership prior to conveyance

Acquisition transactions without a legal act (Section 1(1)(3) GrEStG):

• Transfer through conversion, merger, or demerger of companies

Share Deals (Section 1(2a), (2b), (3) GrEStG):

• When at least 90% of the shares in a real estate-holding company are transferred to new shareholders within a specified period (most recently extended to 10 years)
• This provision is intended to prevent the circumvention of real estate transfer tax through the purchase of company shares

Tax-exempt acquisitions:

• Acquisition by gift or inheritance (Section 3 No. 2 GrEStG - but gift tax/inheritance tax may apply)
• Acquisition by a spouse (Section 3 No. 4 GrEStG)
• Acquisition by lineal relatives (parents, children, Section 3 No. 6 GrEStG)

Taxable vs. tax-exempt acquisitions (GrEStG)

Acquisition	Real Estate Transfer Tax	Legal Basis
Purchase agreement for land/apartment	Yes - 3.5% in Bavaria	Section 1(1)(1) GrEStG
Exchange involving real estate	Yes - based on the value of the consideration	Section 1(1)(1) GrEStG
Highest bid at foreclosure auction	Yes	Section 1(1)(4) GrEStG
Gift / Inheritance	No (gift tax/inheritance tax may apply)	Section 3(2) GrEStG
Acquisition by spouse	No	Section 3(4) GrEStG
Acquisition from parents / children	No	Section 3 No. 6 GrEStG
Share deal ≥ 90% within 10 years	Yes - Real estate transfer tax on property value	Section 1 (2a), (2b) GrEStG (since 2021)
Corporate conversion (merger)	Group privilege, if applicable	§ 6a GrEStG

Process of a Real Estate Acquisition

A typical real estate purchase transaction follows these steps:

1. Draft purchase agreement: The notary prepares the draft based on the agreements of both parties
2. Notarization: The purchase agreement is read aloud before the notary and signed by both parties
3. Priority notice of conveyance: The notary applies for entry of the priority notice in the land register (protection of the buyer)
4. Notification to the tax office: The notary reports the acquisition to the tax office (§ 18 GrEStG)
5. Real Estate Transfer Tax Assessment: The tax office issues the assessment; the tax is due within one month
6. Certificate of No Objection: After payment of the tax, the tax office issues the certificate
7. Land Registry Transfer: The notary applies for a transfer of ownership at the land registry office; the purchaser is registered as the new owner

Special Considerations for Share Deals and Company Acquisitions

Share deals-that is, the acquisition of shares in a real estate GmbH or KG-were long a popular means of avoiding real estate transfer tax. By purchasing company shares (rather than the property directly), there was no direct transfer of the property, so no real estate transfer tax was incurred.

The legislature has largely closed this loophole since 2021: Real estate transfer tax liability now arises as soon as at least 90% of the shares are transferred within a ten-year period. This regulation is relevant for institutional investors and real estate project developers in the Nuremberg metropolitan region. We recommend involving a lawyer specializing in real estate tax law at an early stage in all cases of corporate acquisitions of real estate.

Practical Tip for Property Owners in Nuremberg and Franconia

In Nuremberg and the metropolitan region, we guide buyers and sellers through all phases of the acquisition process. We particularly recommend: Before notarization, check whether exemptions from real estate transfer tax can be applied (e.g., in the case of purchases by family members). For share deals-i.e., the purchase of GmbH shares backed by real estate-the Real Estate Transfer Tax Act (GrEStG) regulations have been significantly tightened since 2021; specialized tax advice is essential here. The Nuremberg-Central Tax Office is responsible for real estate transfer tax in Nuremberg.

Frequently Asked Questions

When does the real estate transfer tax liability arise?

The tax liability arises upon the conclusion of the contractual purchase agreement (notarization)-not only upon entry in the land register. It is therefore the conclusion of the contract, not the actual transfer of ownership, that triggers the acquisition.

What is a share deal and why is it tax-critical?

In a share deal, the purchaser does not buy real estate directly, but rather shares in a company that owns the property. In the past, this was used to save on real estate transfer tax (no “purchase of real estate”). Since 2021, real estate transfer tax has applied starting at a 90% transfer of shares, and the holding period has been extended to 10 years. Share deals have thus become largely subject to tax.

As a recipient of a gift, do I have to pay real estate transfer tax?

No. Acquisitions through gifts or inheritance are exempt from real estate transfer tax under Section 3 of the Real Estate Transfer Tax Act (GrEStG). However, gift tax or inheritance tax may apply. Acquisitions between spouses and between parents and children (in the direct line) are also exempt from real estate transfer tax.

How long does the entire acquisition process take, from notarization to land registry entry?

In practice, the entire process in Nuremberg and Bavaria usually takes 6-12 weeks. The most significant time factors are the tax office’s processing time for the real estate transfer tax assessment (2-6 weeks) and the land registry office’s processing time (1-4 weeks). Until the final registration, the buyer is protected by the priority notice of conveyance.

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