Germany Property Capital Gains Guide (Spekulationssteuer bei Immobilien)
In Germany, capital gains from selling property are subject to Spekulationssteuer (speculation tax) if sold within 10 years of acquisition. The gain is taxed at your marginal income tax rate (up to 45% plus Solidaritätszuschlag and Kirchensteuer). The tax is waived if you hold the property for more than 10 years or if you personally occupied the property (Selbstnutzung).
The Spekulationssteuer applies to profits from private sales transactions (private Veräußerungsgeschäfte) under §23 EStG (Einkommensteuergesetz). Unlike the Abgeltungsteuer for financial assets, property gains are treated as ordinary income and taxed at your progressive rate. This can result in a high tax burden if you sell a profitable property within the speculation period. Strategic planning — especially timing your sale after the 10-year mark — can save substantial tax. For related reading, see our Property Investment Guide → and Capital Gains Tax Guide →.
Key Rules for Property Capital Gains
- 10-year speculation period (Spekulationsfrist): The 10-year period begins on the date of the notarised purchase contract (Kaufvertrag) and ends 10 years later. If you sell anytime after this date, the gain is completely tax-free. The holding period is calendar-based — selling on the 10th anniversary is fine.
- Owner-occupied exemption (Selbstnutzung): Property that you used for your own residential purposes is entirely exempt from CGT — no minimum holding period. The rule: you must have lived in the property in the year of sale and in both preceding calendar years. For example, if you buy in 2020, live there from 2021–2025, and sell in 2025, the gain is tax-free.
- Partial exemption: If you used part of the property for rental and part for personal use, only the rental portion's gain is taxable. The self-use portion is exempt. Careful allocation of purchase cost and sale proceeds between the two portions is essential.
- Calculation of the gain: The taxable gain is: Veräußerungspreis (sale price) minus Anschaffungskosten (acquisition costs) minus Werbungskosten (selling expenses). Acquisition costs include the purchase price plus all Kaufnebenkosten (Notar, GrESt, agent, Grundbuch). Selling expenses include agent fees, legal costs, and advertising.
Tax Rates and Practical Strategy
- Marginal rate taxation: The gain is added to your other income in the year of sale and taxed at your personal progressive rate (0%–45%) plus 5.5% Soli and church tax (if applicable). A large gain can push you into the 45% top bracket (Spitzensteuersatz) for that year. Unlike some countries, there is no reduced long-term rate for property.
- Loss offsetting: Losses from property sales within 10 years can be offset against gains from other property sales within the same period. However, property losses cannot offset other types of income (e.g., salary, rental income). They can only be carried forward against future property gains within the Spekulationsfrist.
- Timing strategy: The simplest CGT avoidance strategy is to hold for >10 years. If you need to sell earlier, consider selling in a low-income year (e.g., after retirement or during a sabbatical) when your marginal rate may be lower. Renovations made within the holding period that qualify as Herstellungsaufwand (capital improvements) can be added to the acquisition cost, reducing the taxable gain.