Transaction costs

Transaction Costs - Transaction costs are all incidental expenses incurred when buying or selling a property in addition to the purchase price. They include real estate transfer tax, notary and land registry fees, real estate agent commissions, and, if applicable, appraisal fees. In Bavaria, transaction costs for a purchase typically amount to 7-8.5% of the purchase price and must generally be financed entirely from equity - banks usually do not provide loans to cover transaction costs.

Breakdown of Additional Purchase Costs

Transaction costs when buying real estate consist of several items:

Real estate transfer tax: In Bavaria, 3.5% of the purchase price-the lowest rate in Germany. The calculation is based on the purchase price recorded in the purchase agreement. The tax is assessed by the tax office after notarization and must be paid before the land registry office transfers ownership.

Notary fees: Approx. 1.0-1.5% of the purchase price for notarizing the purchase agreement, establishing the land charge (if financed), registering the priority notice of conveyance, and all closing activities. Notary fees are regulated by law under the GNotKG and are non-negotiable-all notaries charge the same rates.

Land Registry Fees: Approx. 0.3-0.5% of the purchase price for registering the change of ownership and the land charge. These fees are also regulated by law.

Broker’s Commission: In Bavaria, for residential properties, 3.57% incl. VAT per party (i.e., 3.57% for the buyer and 3.57% for the seller)-but since the Act on the Allocation of Brokerage Costs (2020), the following applies: If the seller engaged the broker, the buyer may pay no more than the seller. In practice, the buyer and seller effectively split the commission equally, i.e., 1.785% incl. VAT per party if the total rate is 3.57%.

Overall, transaction costs in Bavaria for a purchase with an agent amount to approximately 7-8.5% of the purchase price.

Calculation Example: Transaction Costs in Nuremberg

For a purchase price of 400,000 euros in Nuremberg:

Item	Rate	Amount
Real estate transfer tax (Bavaria)	3.5%	€14,000
Notary fees (approx.)	1.2%	€4,800
Land registry fees (approx.)	0.4%	€1,600
Real estate agent commission (buyer)	1.785%	€7,140
Total	approx. 6.9%	approx. €27,540

These approximately €27,000 must be financed from equity-in addition to the minimum equity required by the bank to grant the loan (usually 10-20% of the purchase price).

Transaction Costs Upon Sale

The seller also incurs transaction costs that reduce the net proceeds:

• Broker’s commission (1.785% split equally)
• Discharge of land charges (approx. 0.2% of the land charge amount - land registry entry and notary fees)
• Early repayment penalty (in case of early loan repayment; can be significant depending on the remaining term and interest rate)
• Speculation tax (if sold within 10 years of purchase and not used as a primary residence in recent years)
• Appraisal (500-3,000 euros, optional, but advisable for properties that are difficult to value)

Total costs for the seller typically amount to 2-4% of the sale price (excluding speculation tax, which can be significantly higher depending on the situation).

Practical Tip for Property Owners in Nuremberg

We recommend that buyers in the Nuremberg metropolitan area carefully calculate all transaction costs before making a purchase decision and realistically factor them into their equity planning. Bavaria has the lowest real estate transfer tax in Germany at 3.5%-a location advantage of up to 12,000 euros on a purchase price of 400,000 euros compared to North Rhine-Westphalia (6.5%, or 26,000 euros). However, this advantage only applies if it is deliberately planned for.

Tip for buyers without sufficient equity to cover incidental costs: Some banks offer so-called 110% financing, which also covers transaction costs. However, this comes with significant interest rate premiums and increases the risk of total loss-we recommend this option only in exceptional cases with stable income and clear prospects for appreciation.

Frequently Asked Questions

Can I deduct transaction costs for tax purposes?

For rental properties, transaction costs are part of the acquisition costs and are depreciated via depreciation-real estate transfer tax, notary and land registry fees, as well as brokerage commissions increase the depreciation base (on the building portion, not the land value). This means: These costs are not claimed for tax purposes immediately, but over the depreciation period of 33 to 50 years. For owner-occupied properties, transaction costs are not tax-deductible. An exception is made for contractor services performed after the purchase-these can be deducted directly from the tax liability at 20% of the labor cost (up to 1,200 euros/year) under Section 35a of the Income Tax Act (EStG).

How much is the real estate transfer tax in Bavaria?

The real estate transfer tax in Bavaria is 3.5% of the notary-certified purchase price-the lowest rate of all federal states. By comparison: North Rhine-Westphalia, Brandenburg, Schleswig-Holstein, Thuringia, and Saarland charge 6.5%, Hesse 6%, and Baden-Württemberg 5%. For a purchase price of 400,000 euros, you would pay 14,000 euros in Bavaria and 26,000 euros in North Rhine-Westphalia-a savings of 12,000 euros that can be directly applied as additional equity toward financing or significantly reduce the total acquisition costs.

Are there ways to reduce transaction costs?

The options are limited, but they do exist. The real estate transfer tax is set by law and is non-negotiable when purchased from a natural person. However: If the purchase of the property and the construction are structured as separate contracts (property from the owner, construction by a contractor), the real estate transfer tax applies only to the property price-this results in significant savings for new construction projects. Notary fees are governed by the GNotKG and are uniformly regulated. There is potential for savings on the broker’s commission (direct purchase without a broker, if properties are listed without a broker) and on the land charge-those who assign an existing land charge with the same bank instead of creating a new one save approximately 50% on land registry fees.

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