2026-10-10 11:52

Can you sell property in Germany without paying tax?

For a private owner, yes: if purchase and sale are more than ten years apart, the gain on German property is not taxed in Germany, for residents and non-residents alike (§ 23(1) sentence 1 no. 1 EStG). A GmbH has no such period: its gain on a sale is always taxed at company level, and an exit through a share sale is taxed under its own rules. Exemption in Germany is not exemption in the seller's country of residence.

For private owners, the ten years run from contract to contract

An individual's gain on land or a building bears income tax only if purchase and sale are no more than ten years apart. A non-resident then pays it as tax on German-source income (§ 49(1) no. 8 EStG). The period runs not between entries in the land register (Grundbuch) but between the dates the parties became bound by the purchase and the sale contracts. A contract under a condition precedent signed within the period is a sale within it, even if the condition is met later (BFH, judgment of 10 February 2015, IX R 23/13). The exemption for owner-occupied homes does not cover commercial property.

Within ten years, the sale price minus acquisition cost and transaction costs is taxed at progressive rates of 14–45% plus the solidarity surcharge (Solidaritätszuschlag). Depreciation (AfA) deducted from rental income over the years reduces the acquisition cost and so raises the taxable gain (§ 23(3) sentence 4 EStG). The €1,000 threshold is no allowance: if a year's total gains from such sales reach €1,000, all of it is taxed (§ 23(3) sentence 5 EStG).

Frequent sales turn an owner into a property dealer

The ten-year rule protects the management of one's own assets, not trading. The Federal Ministry of Finance assumes that selling more than three properties within five years generally amounts to commercial property dealing (gewerblicher Grundstückshandel). The count includes properties each bought or built no more than five years before its sale. The gain is then business income, taxed regardless of the holding period and subject to trade tax (Gewerbesteuer).

GmbH and share sales are taxed whatever the holding period

Exhibit 1. Only a private owner is exempt after 10 years

Seller	Sale within 10 years	Sale after 10 years
Individual, property held privately	Income tax of 14–45% plus solidarity surcharge	Not taxed in Germany
Individual classed as a property dealer	Business income, including trade tax	The same: for dealing, the holding period is irrelevant
GmbH sells the property	Corporate income tax of 15.825% and trade tax unless the extended reduction applies	The same
Shareholder with a stake of 1% or more sells GmbH shares	60% of the gain taxed; a non-resident pays if there is no treaty or it leaves the right with Germany	The same

A GmbH is taxed on the price minus the property's tax book value after depreciation, however long it has held the property. Its corporate income tax (Körperschaftsteuer) rate, including the solidarity surcharge, is 15.825%. Whether the extended reduction (erweiterte Kürzung) frees that gain from trade tax depends on the relief's strict conditions and the transfer date — a question for a tax adviser before the deal. A dividend to the shareholder then bears 26.375% withholding tax, reduced under EU rules or a double tax treaty (see Part 9 of the series German Prime Retail).

On a share sale, an individual who held at least 1% of the capital in the last five years is taxed on 60% of the gain, whatever the holding period (§§ 3 no. 40, 17(1) EStG). For a corporate shareholder, 95% of such a gain is effectively exempt (§ 8b(2), (3) KStG). For a non-resident this is German-source income (§ 49(1) no. 2 e EStG). But a treaty may leave the taxing right to the country of residence alone — unless it has a clause on companies deriving more than 50% of their value from real estate.

The country of residence may take what Germany forgoes

Germany forgoes the tax after ten years; the seller's country of residence may tax the gain with no time limit. Treaties usually leave the right to tax real estate gains with the country where the property lies, and the country of residence relieves double taxation by exempting the gain or crediting the German tax. Under the credit method, the German exemption achieves nothing: there is nothing to credit, and the full tax is paid in the country of residence.

Implications for investors

1. Count the ten years by the contract dates. The period runs from purchase contract to sale contract, not between land-register entries; a contract under a condition precedent signed within it is a sale within it.

2. Track your sales over any five-year span. Selling more than three properties within five years, each bought or built no more than five years before its sale, generally makes the gain business income — subject to trade tax, whatever the holding period.

3. Start the exit calculation with an adviser in your country of residence. If that country credits the German tax, the German exemption achieves nothing: the full tax is paid there.

What to check:
• the dates of the notarised purchase and sale contracts, and whether more than ten years lie between them;
• how many properties you have sold, or plan to sell, within five years;
• who owns the property — you personally or a GmbH — and what share of the capital you hold;
• the depreciation claimed during ownership: on a sale within the period, it raises the taxable gain;
• how your country of residence taxes the gain, and which method of relieving double taxation its treaty with Germany provides.

Sources: § 23(1) sentence 1 no. 1, (3) sentences 4 and 5 EStG; §§ 3 no. 40, 17(1), 32a, 49(1) nos. 2 and 8 EStG; § 8b(2), (3) KStG; § 2(1) GewStG; BFH, judgment of 10 February 2015, IX R 23/13; Federal Ministry of Finance letter of 26 March 2004 (BStBl. I p. 434) on distinguishing asset management from property dealing; Federal Ministry of Finance, German negotiating basis for double tax treaties (version of 3 July 2026), Article 13. Legal position as of October 2026.

Photo: Jan-Philipp Thiele / Unsplash

This page is general information and not investment, legal or tax advice.

Ilya Gordon