Land Transfer Tax in BavariaRate, Calculation and Special Cases

Tax Rates Compared Across Germany

The states' rates can change; the rate on the day of notarisation applies.

With a purchase price of €300,000, land transfer tax in Bavaria is €10,500 – in Brandenburg it would be €19,500. The difference of €9,000 is hard cash.

Calculation and Due Date

Land transfer tax is calculated on the purchase price agreed in the purchase contract. Contents sold with the property (fitted kitchen, awning, sauna) that are shown separately in the contract are not taxed – provided the value is realistic.

Process:
The notary (Notar) reports the notarisation to the competent tax office (Finanzamt). The tax office usually sends the tax assessment within 2–6 weeks. Payment is due one month after receipt. Only after payment does the tax office issue the certificate of non-objection (Unbedenklichkeitsbescheinigung) – without it, ownership cannot be transferred in the land register (Grundbuch).

Allowances and Exemptions

As a general rule: every property purchase triggers land transfer tax. But there are exceptions:

Transfers between spouses and registered civil partners: Tax-free, regardless of value.

Transfers in direct line (parents → children, grandparents → grandchildren): Tax-free.

Sale between siblings: Not tax-free – a common misunderstanding. However, dividing a jointly inherited house among co-heirs is tax-free.

Inheritance: Does not trigger land transfer tax (but inheritance tax may apply).

Gift: Generally exempt from land transfer tax (but gift tax may apply).

Speculation Tax – Not to Be Confused

Land transfer tax arises on purchase and is paid by the buyer. Speculation tax (Spekulationssteuer, § 23 EStG) arises on sale if the property is sold within ten years of purchase (without owner-occupation in the last three calendar years). It is paid by the seller and is based on the capital gain, not on the purchase price.

Clarify detailed tax questions with your tax adviser. General information is available from the Bavarian State Tax Office.

What Typically Applies in Upper Franconia

Together with the notary, land register and, if applicable, the agent's fee, these make up the total purchase costs, which you will find in the guide Purchase costs in Bavaria.

What Belongs to the Tax Base

What is taxed is not just the purchase price in the narrow sense but the buyer's entire consideration (Gegenleistung):

The single contractual arrangement (einheitliches Vertragswerk): If you buy a plot from a developer, or from a seller who also has the house built, the tax office often treats both as one acquisition. The construction of the house is then also taxed at 3.5%. If you choose the plot and the building contractor independently of each other, you only pay the tax on the plot. More under Buying a plot and Developers.

Other Tax-Free Cases

This rule saves a lot of money, particularly on divorce and inheritance: if one spouse takes over the joint house as part of the divorce, no land transfer tax is due. More under Property in a divorce and Inheritance.

Share Deals for Commercial and Large Properties

With larger investment and commercial properties, sometimes it is not the land that is sold but the company that owns it (share deal). Since 2021 this triggers land transfer tax if at least 90% of the shares pass to new shareholders within ten years. Structures below this threshold are complex and belong in the hands of tax advisers. Background under Tax aspects of commercial property.

If the Purchase Is Reversed

If a purchase falls through after notarisation – for example because the buyer does not pay and the seller withdraws – land transfer tax can be refunded or not assessed under certain conditions (§ 16 GrEStG). Important: an application must be made, and the reversal must actually have been carried out. Ask the notary for advice on this.

Budgeting Correctly for Land Transfer Tax

Because land transfer tax has to be paid from equity, it belongs in every financing plan. Here is how to proceed:

1. Calculate the amount: purchase price minus separately shown contents, multiplied by 3.5%.
2. Plan the timing: the assessment usually arrives a few weeks after notarisation and payment is due a month later – often before the purchase price is paid or shortly afterwards.
3. Secure liquidity: keep the amount ready in an instant-access savings account, not in long-term investments.
4. Proof for the bank: banks require proof of equity including purchase costs.

Example: purchase price €310,000 for a terraced house in Coburg, of which the fitted kitchen and awning are shown separately in the contract at €9,000. Tax base €301,000, land transfer tax €10,535 – instead of €10,850 without the separate listing. The saving of €315 is modest, but legal and simple.

Common Misunderstandings

Land Transfer Tax and Investment Property

For investors, land transfer tax is part of the acquisition costs. The part attributable to the building is taken into account for tax purposes through depreciation; the part for the land is not. With a building share of 80% and 2% AfA, €168 of €10,500 land transfer tax is therefore written off each year. More in the guide Depreciation (AfA) on property. Calculating rental yield shows how purchase costs affect the yield.

Land Transfer Tax When Buying from a Developer and on New Builds

If you buy a new-build flat or a turnkey house from a developer (Bauträger), land transfer tax is calculated on the entire purchase price – that is, on the plot and the building. This applies even if the house has not yet been built at the time of the contract. With a price of €450,000, the tax in Bavaria is €15,750.

It is different if you buy a plot and, independently of that, commission a building contractor or prefabricated house supplier. Then only the plot is taxed. What matters is whether the purchase of the plot and the building contract are legally and economically linked. Signs of such a link include a plot that is only offered together with a particular type of house, or a seller who also earns from the construction. If in doubt, it is worth consulting the notary before signing.

What Happens After Payment?

1. The tax office issues the certificate of non-objection and sends it to the notary.
2. The notary applies for the transfer of ownership as soon as the purchase price has also been paid.
3. The land registry enters the buyer and informs everyone involved.

Keep the land transfer tax assessment and proof of payment – for let properties they are part of the acquisition costs, and they will be needed again for a later tax return or a sale.

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