What additional costs are incurred when a property is purchased?
In today's edition of our videoblog you will learn what additional costs are involved in the purchase of a property?
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Frequently, capital investors ask themselves
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Here is the transcript of episode 30 to read:
Incidental costs are incurred when purchasing an investment property. These are the one-off incidental acquisition costs during the purchase phase. In Germany, the first of these is the land transfer tax - the biggest chunk. The land transfer tax is calculated as a percentage of the purchase price. There are federal states with very little real estate transfer tax, those whose economies are strong, with low debt levels, positive income development and strong population growth.
On the other hand, there are federal states that tend to have economic difficulties and therefore levy a high land transfer tax. Therefore, it is important that a professional also pays attention to the framework data, such as the ancillary purchase costs, when selecting a product and prepares a reasonable calculation in which these ancillary costs are taken into account. Additionally, in Germany, the purchase of an investment property is not done by a handshake or personal meetings, but through a neutral notary.
The notary is licensed by the state and is vetted by the state to ensure that he or she is acting on behalf of the state. A notary's job is to make sure the buyer gets the property safely and the seller gets the money safely. The notary receives a fee for this, which is also part of the acquisition fee. These fees are set by the state in the notary fee schedule and are monitored by the notary chambers. It is therefore not negotiable.
Just like the land transfer tax, the incidental acquisition costs cannot be negotiated. These are standard costs that are incurred with every real estate purchase. We have already mentioned the land transfer tax and the notary fees. In addition, the purchase is processed through a local court, for which a fee is also incurred. These are the general incidental costs when buying real estate.
By the way, since you are interested in rented real estate, you should know that the state will cover a large part of the ancillary acquisition costs that we have just discussed. In the case of a rented property, you can deduct the incidental acquisition costs from your taxes. Unlike an owner-occupied property, the land transfer tax, notary and court costs are part of the tax deductible costs and the tax office will participate in keeping these costs as low as possible.
Investment property, incidental costs, incidental acquisition costs, real estate transfer tax, federal states, notary public, tax reduction