# Buying a house in Germany and renting it out?



## Sirtravelot

Heya.

We're currently in the UK, and have decided to either move back to Germany in 2 years, or move to Spain in 2 years. We can't decide on which country yet.

Now, in light of the economic situations, money that sits in banks is merely rotting away by inflation. However, in Germany, house prices are rising, and in Spain they are sinking dramatically. Even if you buy in Spain and want to sell your house again in a few years, you've got no guarantees that you will be able to! But that's more for the Spanish forum...

Anyway, since German house prices are going up, we've been thinking about buying a house there and renting it out for 2 years -> using a 2 year contract. This is for the following reasons:

-If we buy a house in 2 years, prices could be 10% higher!
-It's a better return than the 0.42% that you get in the savings account.
-If we decide to move to Spain, we can use the rent from that house to pay for renting a house in Spain. This is a much safer alternative than buying in Spain.
-If we decide to move to Spain, we can keep renting the house out. If Spain descends into total chaos, we can go back and apply for "Eigenbedarf".

My question is: How, exactly, do lease contracts differ between Germany and the UK? I understand the landlord in the UK has more rights than in Germany, but what are the specifics? If we go go through this plan, we want to make sure we don't get trapped in any way.

Thanks guys.


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## Bevdeforges

If you're planning on renting out a property in Germany, you may want to consider having a rental agency handle the actual leasing process and interaction for you. Yes, it will take a bite out of your rental income, but you'll have who knows the German laws related to property rental. 
Cheers,
Bev


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## James3214

We did discuss the topic a while ago.
http://www.expatforum.com/expats/ge...iving-germany/55920-buying-house-germany.html

I would say buy somewhere else. Tenants have more rights in Germany than in the UK and it maybe a lot more difficult to get them out. Any profit you make after selling within 10 years will be due to tax.

Personally, if I had cash in the bank now, I would invest the first 30k in UK premium bonds and the rest spread across the European stock markets. But there again, I am a bit of a gambler!


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## beppi

- There are no restrictions on foreigners owning any property in Germany.
- Property ownership does not get you any visa or residency permit.
- Property transaction tax and fees amount to 6-7% or the buying price.
- Rental returns on residential property are generally low - 3-4%/year.
- Rental income is taxable - tax rate is 14-25% ("beschränkte Steuerpflicht").
- Profit from sale within 10 years is also taxable at these rates (Note: There is no guarantee that the current upward trend continues and you'll actually make a profit).
- You'd have to engage a tax consultant for your yearly tax return - at a cost of approx. €250-400.
- Caretakersfor regular maintenance and property agent aren't cheap in Germany.
- Legislation is very tenant-friendly. Getting a tenant out will not be easy - law suits are common and take long. (Drafting a valid, time-limited rental contract is difficult - basically all rental contracts are unlimited!)
- Altogether, a good bank investment will yield more with less hazzle. You can currently get 2%/year!


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## Sirtravelot

beppi said:


> - There are no restrictions on foreigners owning any property in Germany.
> - Property ownership does not get you any visa or residency permit.
> - Property transaction tax and fees amount to 6-7% or the buying price.
> - Rental returns on residential property are generally low - 3-4%/year.
> - Rental income is taxable - tax rate is 14-25% ("beschränkte Steuerpflicht").
> - Profit from sale within 10 years is also taxable at these rates (Note: There is no guarantee that the current upward trend continues and you'll actually make a profit).
> - You'd have to engage a tax consultant for your yearly tax return - at a cost of approx. €250-400.
> - Caretakersfor regular maintenance and property agent aren't cheap in Germany.
> - Legislation is very tenant-friendly. Getting a tenant out will not be easy - law suits are common and take long. (Drafting a valid, time-limited rental contract is difficult - basically all rental contracts are unlimited!)
> - Altogether, a good bank investment will yield more with less hazzle. You can currently get 2%/year!


Which good bank investment? We might make an appointment with the Deutsche Bank, but we don't have a lot of trust in these things.

Are you saying that applying Eigenbedarf wouldn't be easy?

Visa is no problem, we're German.

Are property transaction fees on top of the 5%-7% of a Marklers Courtage?

Decisions, decisions...


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## beppi

Yes, terminating a rental contract for Eigenbedarf is still difficult - it took us 9 months (instead of the legal 3 months) and very strong nerves despite our tenant having no other reason than not wanting to move earlier!
6-7% is the property transaction tax plus legal fees for change of ownership. If you engage a property agent (Makler), which is optional, his fees go on to of that.


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## Sirtravelot

beppi said:


> Yes, terminating a rental contract for Eigenbedarf is still difficult - it took us 9 months (instead of the legal 3 months) and very strong nerves despite our tenant having no other reason than not wanting to move earlier!
> 6-7% is the property transaction tax plus legal fees for change of ownership. If you engage a property agent (Makler), which is optional, his fees go on to of that.



I thought the transaction tax was 3%? Meaning, 5%-7% courtage plus the 3%. Hmm...

We talked to a Makler about this, she said it'd be possible to lease the house for 2 years and then move in. It'd be harder to rent it out because of this, but not impossible. Does that seem as straight forward as it sounds?


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## beppi

The transaction tax (Grunderwerbsteuer) depends on the Land and is between 3.5% (Bavaria) and 6.5% (Schleswig-Holstein from 2014). On top of that goes the legal fees for change of ownership, typically 1-2% of the price - and of course the courtage (if any).
Time-limited rental contracts are possible, but very restricted - get legal advice before you try this!


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## Sirtravelot

beppi said:


> The transaction tax (Grunderwerbsteuer) depends on the Land and is between 3.5% (Bavaria) and 6.5% (Schleswig-Holstein from 2014). On top of that goes the legal fees for change of ownership, typically 1-2% of the price - and of course the courtage (if any).
> Time-limited rental contracts are possible, but very restricted - get legal advice before you try this!



Thank you, will do. It's good to know about the increase in Schleswig-Holstein. Do you know what it is in Hamburg?


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## beppi

http://de.wikipedia.org/wiki/Grunderwerbsteuer_(Deutschland)


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