Selling a property in Berlin

Discussion in 'German Property' started by facelikebambi, Sep 26, 2018.

  1. facelikebambi

    facelikebambi New Member

    Hello,

    Around 12 years ago, I bought a property in Berlin. It was a cash purchase, no tenant. I'm not a particularly experienced property investor - it just seemed like a good buy.

    Now I'm thinking of selling up. As a UK citizen, my basic understanding is this:
    • No capital gains tax would be due, as I've owned the property for 10+ years
    • I will be taxed 25% of the profit from sale, plus the German 'solidarity charge'
    • The buyer usually pays agency fees in Germany.
    Could anybody confirm that I'm on the right lines? Any top tips at this stage?

    I also wonder what the potential impact of Brexit might be on all this, but I assume that's anyone's guess at this stage :)

    Thanks!
     
  2. John62

    John62 New Member

    In Germany there is a law called "Bestellerprinzip". This means the party who hires the agency needs to pay it. So in case you hire an agent to sell your property, the buyer doesn't need to pay him and you have the costs.
    But there are alternatives which are for free. You can publish the property on a portal e.g.
     
  3. Longterminvestor

    Longterminvestor Administrator

    Are there any other elements of the German market which differ from the UK? I think many people automatically assume a like for like situation when dealing in foreign markets. Sometimes this can be very costly!
     
  4. John62

    John62 New Member

    One thing which many foreign investors don't keep in mind is that the rent is also regulated in Germany. According to the "Mietpreisbremse" you are only allowed to collect a rent max 10% higher than the average rent in this area. This is maybe not relevant for facelikebambi, but many people don't know this. Also in case somebody is thinking of renting a property in Germany: Don't go to companies like Akelius. They take advantage of your lack of knowledge and charge way higher prices.
     
  5. FWL

    FWL Member

    Hi @John62

    That is very interesting to know. I also have two questions:-

    How is it policed by the authorities?
    How does it impact the German property market?
     
  6. John62

    John62 New Member

    Hey @FWL
    of course the authorities don't check every contract. This law is commonly known among tenants and if you charge a rent which is too high, the tenant can argue with this law. There is one reason how the landlords can avoid this restriction. If they modernize the apartment, you can charge a higher rent. But the costs should be one third of the property price. If you are interested in this topic, check out what Axelius is doing in German cities. They charge higher prices, but argue with costs for modernization (even if there are doubts how big their costs really are). Mostly they don't get problems, because they rent out to internationals, who are not familiar with the German laws.
     
  7. FWL

    FWL Member

    Ah I see what you mean - if you dont know what the laws are then you are not going to complain. If nobody complains then the potentially illegal rental increases go unchecked. Very clever :)
     
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