Investor Guide
2026-10-10 09:51

Asset Deal (direct property purchase): Tax on the Price, Depreciation on the Price

In an asset deal the buyer purchases the property itself, not shares in its owner, and on entry in the land register (Grundbuch) becomes owner of land and building — and landlord under the existing leases. The route has two financial consequences: real estate transfer tax of 3.5–6.5%, depending on the state, is due on the price — but the buyer also depreciates from its own price.

What it is

The purchase contract must be notarised (§ 311b(1) BGB). Ownership passes by conveyance (Auflassung, § 925 BGB) and registration (§ 873 BGB), and until registration a priority notice (Auflassungsvormerkung, § 883 BGB) protects the buyer. The leases pass to the buyer by law on their existing terms (§§ 566, 578 BGB). Transfer tax attaches to the contract itself, on the price plus any further obligations the buyer assumes (§ 1(1) no. 1, § 9(1) no. 1 GrEStG). The sale of a let property is usually a transfer of a going concern, not subject to VAT, and the buyer steps into the seller's place (§ 1(1a) UStG).
Exhibit 1. The asset deal pays tax on the price but gains a new depreciation base and register protection
Asset deal
Share deal
What is bought
Land and building
Shares in the owning company
Real estate transfer tax
Yes, on the price
On a transfer of 90% or more, on the value under the Valuation Act (§ 8(2) no. 3 GrEStG)
Depreciation base
Building's price plus acquisition costs
Previous tax book value in the company's accounts
Seller's liabilities
As a rule stay with the seller; leases and the property's encumbrances pass
Pass with the company
Protection by the land register's public faith (§ 892 BGB)
Yes
No: it protects acquirers of rights in land, not of shares

Why it matters to investors

Acquisition costs are the first thing the yield must earn back. In the example in Part 11 of the series German Prime Retail, they come to €945,000 on a €10 million store in Lower Saxony, or 9.4% of the price. Tax accounts for €500,000, the notary €41,000, the land registry €17,000, the broker's commission with VAT €357,000 and due diligence €30,000. The tax on the same store would be €350,000 in Bavaria and €650,000 in North Rhine-Westphalia (Part 5).
In return, a German limited-liability company (GmbH) depreciates the building's share of the total investment, capitalised costs included, at 3% a year (§ 7(4) no. 1 EStG). In the same example, that takes €246,300 a year off the tax base (Part 11). Land is not depreciated.
The property comes with its history: the leases on their existing terms and public-law encumbrances (Baulasten). Development contributions for roads are, as a rule, levied on whoever owns the plot when they are assessed, and the current owner can be liable for soil contamination. Finally, the buyer steps into the seller's ten-year input-VAT adjustment period (Part 7).

What to check

• The land-register extract with the documents behind the Section II entries, the register of public-law encumbrances and the contaminated-sites register.
• The complete lease file, including every addendum in text form.
• Treatment as a transfer of a going concern for VAT, and a precautionary VAT option in the notarial deed itself (§ 9(3) sentence 2 UStG).
• The split of development contributions by the date the works were completed, and an assignment of the seller's defect claims (§ 398 BGB).
Related terms: Share Deal · Grunderwerbsteuer · Grundbuch · AfA
Sources: BGB §§ 311b, 398, 566, 578, 873, 883, 892, 925; GrEStG §§ 1, 8, 9; UStG §§ 1(1a), 9, 15a; EStG § 7(4); BauGB § 134; BBodSchG § 4; Gordon Real Estate Group, "German Prime Retail", Parts 5, 7, 8 and 11. Legal position as of 10 October 2026.
Photo: Annie Spratt / Unsplash
This entry is general information and not legal or tax advice.