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11 07 2013
Real Estate Transfer Tax: Berlin Raises Rate to Six Percent

If you are thinking about buying property in Berlin, you should either hurry up or prepare to dig deeper into your pockets later on, as the city's Senate decided in late June to raise the real estate transfer tax from five to six percent. Here is why: The 2011 census found that the city has 180,000 fewer residents than previously assumed, bringing the total population down to 3.3 million. This implies not only that Berlin will have to repay the sum of 470 million euros in tax revenue equalisation payments received for the years 2012 and 2013 each, but also that it will have to make do with less in the years to come. The elevated real estate transfer tax is supposed to compensate the deficit at least to some extent.

Real Estate Transfer Tax Hike: Berlin is Hoping for Millions in Extra Revenues

In conjunction with the passage of the two-year budget of 2014/2015, the Senate resolved to raise the real estate transfer tax. Berlin hopes the move will generate extra revenues of up to 100 million euros per year. It is the third time since 2007 that the real estate transfer tax rate has been raised in Berlin. Initially raised from 3.5 to 4.5 percent, it was raised again in 2012, this time up to five percent.

The new tax real estate transfer tax rate of six percent will make Berlin the second-most expensive place to buy property in Germany, as far as taxes go: Only Schleswig-Holstein charges a yet higher tax than Berlin for the acquisition of homes, condominiums, and other properties by levying a real estate transfer tax rate of 6.5 percent.

Buying Now Will Save You Money

There is a loophole, however, for those intending to buy property in Berlin: The increased real estate transfer tax rate of six percent will not become effective until 01 January 2014. So if you are planning to acquire a condominium, you should not lose any time but take advantage of the yet lower rate by signing before the end of the year. Your savings when doing so can be quite substantial: The acquisition of a condominium for the price of 80,000 euros would today subject you to a real estate transfer tax levy of 4,000 euros. If you wait until 2014, you will pay 4,800 euros in real estate transfer tax for the same condo.