Let's Explore Buying Property in Germany as a Non-Resident!
In 2023, over 1.93 million people moved to Germany.
With its stable economy and thriving real estate market, it is an attractive destination for those looking to make the move abroad.
Whether you're looking for a second home, or somewhere to spend your time off, purchasing property in Germany as a non-resident isn't as complicated as you may think.
However, to ensure you have a smooth experience you should ensure you have a clear understanding of legalities, any financial obligations and local customs. In this brief guide, we will go through the key steps you should take when buying property in Germany as a non-resident.
- Why Buy Property & Live in Germany?
- The Cost of Living in Germany
- Can Non-Residents Buy Property in Germany?
- Will Buying Property in Germany Grant Residency?
- The German Real Estate Market at a Glance
- Step-by-Step to Buying Property in Germany as a Non-Resident
- Consider the Various Costs Involved When Buying a German Property as a Non-Resident
- Tax Implications When Buying a German Property
- Buying a Property in Germany as a Non-Resident: A Summary
Why Buy Property & Live in Germany?
In 2024 and beyond, Germany presents an attractive destination for property buyers due to its strong economy, high standard of living, and excellent infrastructure.
As Europe's largest economy, Germany is a global leader in industries such as engineering, automotive manufacturing, technology and renewable energy, offering abundant job opportunities for skilled professionals.
Recently, Germany has made significant investments in green technologies, making it a hub for sustainable innovation.
Despite the inflation increases seen worldwide in 2024, the cost of living in Germany remains manageable compared to other European nations, such as Switzerland or the UK.
Leading into 2025, Germany's economy is projected to grow, thanks to a resilient labour market and advancements in technology. For those seeking cultural diversity, work-life balance, and access to world-class healthcare and education, moving to Germany is a promising opportunity.
The Cost of Living in Germany
On average, monthly expenses for a single person, living in Germany, range from €900 to €1,300 outside of major cities, while costs in cities like Berlin or Munich range anywhere from €1,500 to €2,500 depending on lifestyle and property you live in.
Germany offers affordable healthcare through its public health insurance system, free education at public universities, and robust social security benefits.
Additionally, the country's well-planned public transport system reduces reliance on cars or other private vehicles, which would cut living expenses further.
Can Non-Residents Buy Property in Germany?
The simple answer is yes, non-residents can buy property in Germany.
The country places no restrictions on foreigners buying property, regardless of whether you are an EU or non-EU citizen.
The lack of restrictions makes the German real estate market accessible to individuals all over the world. However, the process may differ slightly based on your residency status and how you plan to finance the purchase.
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Will Buying a Property in Germany Grant Residency?
Buying property in Germany does not automatically grant residency or any form of Visa status, regardless of the property's value.
Unlike other countries, which offer Golden Visa schemes, German immigration laws do not tie property ownership to residency rights.
To obtain residency in Germany, you must meet other legal requirements, such as securing employment, enrolling in a study program, or proving financial independence as part of a long-term Visa application.
For non-EU nationals, residency is generally dependent on having a legitimate purpose for staying in Germany, such as work, study, family reunification or investment into a business that contributes significantly to the German economy.
Owning a property in Germany can support your case if you apply for a Visa or residency permit, as it demonstrates a commitment to residing in Germany and contributing to the German economy.
It is important to consult with an immigration lawyer to understand how property ownership might fit into a broader residency strategy.
The German Real Estate Market at a Glance
Germany's real estate has consistently been less volatile than markets in many other countries. Germany's property prices have seen steady growth in recent years, with less speculation compared to markets like the USA or the UK.
Cities like Berlin, Munich and Frankfurt have higher property prices, while smaller towns offer more affordable options.
Below is a table detailing the average property costs per square metre in key towns and cities across Germany.
Note: prices will vary depending on location, property type and market demand.
Average Property Prices per Square Metre in Germany
| City/Region | Average Price (per square metre) |
|---|---|
| Berlin | €5,000 - €8,000 |
| Munich | €7,500 - €12,000 |
| Frankfurt | €6,000 - €10,000 |
| Düsseldorf | €5,000 - €8,500 |
| Bremen | €3,000 - €5,500 |
| Hanover | €3,200 - €5,500 |
Step-by-Step to Buying Property in Germany as a Non-Resident
1) Research the Market
Before diving into property hunting, familiarise yourself with market trends. Consider factors such as:
- Location
- Property Type
- Potential Rental Yields
2) Work with Professionals
Working with local professionals in the area of Germany where you're looking to purchase a property can streamline the buying process. Make sure to do your research before deciding which real estate agent, lawyer and notary to work with.
3) Financing Your German Property Purchase
Mortgage Options: Non-residents can apply for a mortgage with German banks. While some lenders may require a higher down payment, up to 40% for non-residents, competitive rates are available, so make sure to compare and consider all.
Proof of Funds: Banks will require documentation to show proof of income, credit history and asset statements.
Currency Considerations: If you're purchasing a property in Germany and need to exchange your home currency into Euros, it's important to be mindful of this, a poor exchange rate and high transfer fees can add unwanted expense to your overall costs.
At EasyFX, we make sure that customers looking to buy property abroad find a great exchange rate and can say goodbye to any sort of transfer fee for converting their money into Euros.
We've allowed customers to save thousands on overseas property purchases by providing an alternative to using high-street banks who charge considerably more on exchange rates which just isn't necessary.
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4) Conduct Due Diligence
Land Registry Check: Verify the property's ownership and ensure there are no outstanding debts tied to it.
Property Valuation: Conduct a professional valuation to avoid overpaying.
5) Finalising the Purchase
Drafting the Sales Contract: The notary will prepare a legally binding contract. Both buyer and seller must sign it in the presence of the notary.
Paying the Purchase Price: Typically, the buyer transfers funds to the seller's account after the contract is notarized, the funds can also be sent to a chosen lawyer to complete the transaction.
Registering Ownership: The property is officially transferred to the buyer's name through the Land Registry.
Consider the Various Costs Involved When Buying a German Property as a Non-Resident
Purchase Price
Property prices will vary widely depending on the German town, village, or city you choose to buy in, as well as the size and property type.
Additional Costs
Expect to pay an additional 10-15% of the property's purchase price for:
- Property Transfer Tax (Grunderwerbsteuer): 3.5% to 6.5% depending on the federal state.
- Notary Fees and Land Registration: Approximately 1% of the property purchase price.
- Real Estate Agent Fees: Typically 3 to 7% plus VAT depending on the agreement and region of Germany.
- Legal Fees: This will be specific and vary from lawyer to lawyer.
Tax Implications When Buying a German Property
Annual Property Taxes
Owners of property in Germany must pay an annual property tax, typically, 0.26% to 0.35% of the property's assessed value.
Rental Income Tax
If you rent out your property, rental income is subject to German income tax.
Non-residents are taxed only on their German-sourced income.
Capital Gains Tax in Germany
If you sell your property within 10 years of purchase, Capital Gains Tax will apply.
However, properties held for more than 10 years are exempt.
Buying Property in Germany as a Non-Resident: A Summary
To summarise, purchasing a property in Germany as a non-resident is both a promising opportunity and with the right guidance an efficient process. By conducting research, seeking expert advice and gaining a clear grasp of the associated costs and legal requirements, non-residents can successfully acquire property in one of Europe's most appealing markets.
Whether you're captivated by the dynamic energy of Berlin's urban life or the tranquil beauty of Bavaria's picturesque landscapes, Germany offers diverse options to suit all preferences.
Manage Your Transfer of Funds for a German Property with EasyFX
If you’re not sure where to start, or would just like some guidance, our expert team can help you get to grips with the process of buying property overseas.
Get in touch with one of our team today, for more information and a free money transfer quote.
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Note: This guide provides general information and guidance on buying property in Germany as a non-resident and should not be construed as legal, financial, or tax advice. Always consult with qualified professionals, including real estate attorneys, tax advisors, and financial experts to address your specific circumstances and ensure compliance with applicable laws and regulations.
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