Selling an apartment building in Munich: step by step

Let’s start with the question: How much is your apartment building in Munich actually worth? Find out all the steps of the sales process, from the valuation to handing over the keys.

Determine the value of your apartment building

The value of your property depends on various factors, including the location, the size of the apartments and the condition of the building, depending on the year of construction. A realistic sales price is crucial for a successful sale.

How to value an apartment building

The valuation of an apartment building is based on specific methods such as the comparative value method, the asset value method and the income capitalization method. A combination of these methods provides a realistic market value.

At least two of these methods are usually used to determine an exact value.

• Valuate apartment building
• Typical evaluation procedures
• Free evaluation by experts

Selling in Munich: What to look out for?

When selling your apartment building in Munich, you should consider a few important aspects:

1. Location and property prices: The target group of buyers depends heavily on the location and current property prices.
2. Documents: Make sure that you have prepared all relevant documents such as floor plans, land register excerpts and tenant lists.
3. Good contacts or an estate agent: An experienced estate agent can help you to organize the sales process efficiently and to approach the right buyers.

Location and property prices: The buyer target group in Munich

Munich is a sought-after real estate market with high property prices. The target group of potential buyers is looking for long-term investments and is prepared to pay corresponding prices.

You need to reach people who focus on long-term investments and do not need immediate cash flow.

Documents: Floor plans, land register excerpt, tenant lists, etc.

Before you start the sales process, make sure you have all the necessary documents for the property sale ready. This includes, among other things:

1. Land register extract
2. Parcel map
3. Building plans and building permits
4. Refurbishment status
5. Tenancy agreements and tenant list
6. Operating cost statements
7. Energy certificate
8. Status report or expert opinion

Good contacts or a good broker

As apartment buildings in Munich often fetch high prices, it is advisable to consult an experienced estate agent. An estate agent has the necessary contacts and can help you to approach the right buyers and achieve the best possible price.

Ultimately, it is always a personal question as to whether you want to sell with or without an estate agent.

Taxes when selling in Munich: What will you have to pay?

A quick look at the tax aspects of selling your apartment building in Munich:

1. Speculation tax: Sale within the speculation period is subject to tax.
2. 3-object rule in Munich.
3. Asset & share deals: differences in taxation depending on the sales structure.

The taxes are the same regardless of whether you are selling in Altstadt-Lehel, Ludwigsvorstadt-Isarvorstadt, Maxvorstadt, Schwabing-West, Neuhausen-Nymphenburg, Au-Haidhausen, Sendling-Westpark, Schwanthalerhöhe, Sendling or Bogenhausen.

Speculation tax: selling tax-free?

The speculation period is generally 10 years for rented properties. If you sell within this period, you must pay tax on the profits. After the period has expired, the sale is tax-free.

Further details on the 3-property rule and asset deals vs. share deals can be found in our article here.

Real estate & tax coaching

Do you need further support with the sale of your apartment building in Munich? We offer real estate and tax coaching by experts and investors. Contact us for more information:

• Real estate coaching
• Real estate tax coaching
• Contact us

Also discover our resources for real estate beginners:

• Real estate beginners

Only 1.54% tax on real estate sales

One option for a tax-optimized sale is the share deal. In this case, however, the property must already have been purchased by a company (such as Immobilien GmbH) (not as an individual). A share deal is possible if you have the company in a holding structure. This means you only pay 1.54% tax due to the intercompany privilege(§ 8b KStG).

• Asset deal = property is sold
• Share deal = company is sold (with real estate ownership)

Here is the construct for a share deal in a holding company:

Now let’s calculate our example again, starting with the direct sale of a property!

Sale of a property as a company 🡆 Asset deal

Let’s calculate the exemplary tax in Berlin for the sale of a property as a company (asset deal).

• Purchase 2024 = 2,100,000 euros
• Sale in 2028 = 4,100,000 euros
• Taxable profit Berlin approx. 19.1 % (trade tax 4.1 %, corporation tax 15 %) = EUR 2,000,000
• At 19.1 % = 382,000 euros

Sale of a real estate GmbH as a company 🡆 Share deal

Here is a comparison of the tax burden for the sale of a real estate GmbH as a company in Berlin (share deal):

• Purchase 2024 = 2,100,000 euros
• Sale in 2028 = 3,100,000 euros
• Taxable profit = 1,000,000 euros
• For GmbH 1.54 % = 1,540 euros

You can see how huge the difference is.

Bonus! No land transfer tax on purchase

Let’s delve a little deeper into the subject of real estate and tax optimization!

Again, simply put:

• Sale of Immobilien GmbH below 89% = no real estate transfer tax

Why is this the case? In Germany, the sale of shares in a GmbH that owns real estate is not normally subject to real estate transfer tax as long as the shares are below a certain percentage(§ 5 GrEStG).

What are the advantages? Real estate as an investment must bring a profit, usually calculated by the rental yield. The land transfer tax increases the purchase price by up to 6.5%, depending on the federal state. For 1 million euros, this is a cost of 65,000 euros. This directly increases the yield by a few percent.

Want to learn more?

Real estate & tax coaching

Real estate & tax coaching from experts and investors. I am happy to bring you together with the best:

• Real estate coaching
• Real estate tax coaching
• Contact us

Here you can find more for:

• Real estate beginners

The typical sale: “asset deal”

The difference: In an asset deal in the real estate context, specific assets such as land and buildings are sold individually, whereas in a share deal the shares in the company that owns the real estate are transferred.

Simply put:

• Asset deal = property is sold
• Share deal = Immobilien GmbH is sold

A share deal means that the buyer does not acquire the property itself, but the – in this case – Immobilien GmbH. Here is a short infographic. Then back to the direct sale of the apartment building, after which I will explain more about holding companies and taxes on the sale.

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Typically, as a private individual, you usually sell the apartment building directly. These are relevant for you:

1. Speculation tax
2. Three-object rule

Taxes on sale

A very quick look at taxes when selling an apartment building in Berlin:

1. Speculation tax: sell tax-free
2. 3 objects rule in Berlin
3. Asset & share deals: only 1.54% tax

Speculation tax: sell tax-free

The speculation period explained more quickly:

• Owner-occupied = 3 years
• Rented = 10 years

If you sell within the speculation period, you must – simply put – pay tax on the profits as normal, just like income from work, regardless of whether you are employed or self-employed. After the period has expired, the sale is tax-free. If you want to do a quick calculation, use my free speculation period calculator.

Tax calculation: Example

If you sell within the speculation period, you must – simply put – pay tax on the profits as normal, just like income from work, regardless of whether you are employed or self-employed. As a single person, this would typically mean a top tax rate of 42%.

Sale within the speculation period (< 10 years) as a private individual:

• Purchase 2024 = 2,100,000 euros
• Sale in 2033 = 4,100,000 euros
• Taxable profit = 2,000,000 euros
• At 42% (single person) = 840,000 euros

Sale within the speculation period (< 10 years) as a company:

• Purchase 2024 = 2,100,000 euros
• Sale in 2033 = 4,100,000 euros
• Taxable profit Berlin approx. 19.1 % (trade tax 4.1 %, corporation tax 15 %) = EUR 2,000,000
• At 19.1 % = 382,000 euros

Sale within the speculation period (> 10 years):

• Purchase 2024 = 2,100,000 euros
• Sale in 2034 = 4,100,000 euros
• Taxable profit = 2,000,000 euros
• Tax free

But you can’t buy 10 properties now, wait 3 years and take the profits from property appreciation, because:

3 objects rule in Berlin

There is also the 3-property rule. If you sell more than 3 properties in 5 years, it is commercial real estate trading.

When selling real estate, the “3-object rule” refers to the fact that private individuals in Germany can sell up to three properties within a five-year period tax-free. If a person sells more than three properties within this period, this is considered commercial real estate trading and is subject to income tax – even if they are not rented out but are owner-occupied.

After 10 years of holding, however, the sale is always tax-free.

Why does this rule exist?

Just like the speculation tax, the rule is intended to curb speculation on the real estate market and encourage the sale of real estate for residential purposes.

So how do the “big players” save on taxes?

Share deals: selling a company “instead of” real estate

One option for a tax-optimized sale is the share deal. In this case, however, the property must already have been purchased by a company (such as Immobilien GmbH) (not as an individual).

Only 1.54% tax on sale

A share deal is possible if you have the company in a holding structure. This means you only pay 1.54% tax due to the intercompany privilege(Section 8b KStG).

• Asset deal = property is sold
• Share deal = company is sold (with real estate ownership)

Let us now calculate our example again, starting with the direct sale of a property:

Sale of a property as a company (asset deal):

• Purchase 2024 = 2,100,000 euros
• Sale in 2028 = 4,100,000 euros
• Taxable profit Berlin approx. 19.1 % (trade tax 4.1 %, corporation tax 15 %) = EUR 2,000,000
• At 19.1 % = 382,000 euros

Sale of a real estate GmbH as a company (share deal):

• Purchase 2024 = 2,100,000 euros
• Sale in 2028 = 3,100,000 euros
• Taxable profit = 1,000,000 euros
• For GmbH 1.54 % = 1,540 euros

You can see how huge the difference is.

No real estate transfer tax on purchase

Let’s delve a little deeper into the subject of real estate and tax optimization!

Again, simply put:

• Sale of Immobilien GmbH below 89% = no real estate transfer tax

Why is this the case? In Germany, the sale of shares in a GmbH that owns real estate is not normally subject to real estate transfer tax as long as the shares are below a certain percentage(§ 5 GrEStG).

What are the advantages? Real estate as a capital investment must bring a profit, usually calculated by the rental yield. The land transfer tax increases the purchase price by up to 6.5%, depending on the federal state. For 1 million euros, this is a cost of 65,000 euros. This directly increases the yield by a few percent.

Want to learn more?

Real estate & tax coaching

Real estate & tax coaching from experts and investors. I am happy to bring you together with the best:

• Real estate coaching
• Real estate tax coaching
• Contact us

Here you can find more for:

• Real estate beginners

Negotiation of the broker’s commission

In contrast to the letting of real estate, where the ordering principle applies, i.e. the estate agent’s client must pay the commission, the situation is different for the sale of real estate. When selling, the estate agent’s commission can be freely negotiated between the seller and buyer. This offers scope for individual agreements that can meet the interests of both the seller and the buyer.

“When selling, the broker’s commission can be freely negotiated between the seller and buyer.”

No legally defined commission amount

An important aspect to consider is that the amount of commission for estate agents in Germany is not set by law. There are therefore no maximum commission levels that may not be exceeded. This freedom leads to a wide range of commission rates, depending on the region, the value of the property and the negotiation between the parties.

“The commission for estate agents is not set by law in Germany. So there is no maximum commission amount.”

Typical estate agent commission for house sales

Despite the lack of legal requirements, estate agent commissions are often based on the standard rates of the respective federal states’ estate agent commissions. For properties under 1 million euros, the typical commission is between 5.95% and 7.14% including VAT. These rates can be used as a guide when estimating the costs of selling a villa.

Does the commission remain the same for more expensive properties?

Reduced commission for high-priced properties

For properties with a value of more than 1 million euros, the broker’s commission is usually reduced. The commission is often in the range of 4-5%. For even more expensive properties, such as those over 10 million euros, the commission can drop further to 2-3%. From a sales price of 50 million euros, the rates are even 1-2 %. This staggered adjustment of the commission rates takes into account the fact that for very expensive properties, an appropriate remuneration can be achieved for the estate agent even without a proportionally high percentage.

• < 1 million euros, typically 5.95% to 7.14% (incl. VAT)
• > 1 million euros, typically 4.76 to 5.95 %
• > 10 million euros, typically ~ 2.38 to 3.57 %
• > 50 million euros, typically ~ 1.19 to 2.38 %

Most deals are done with real estate agents, in Germany and cities like Berlin over 80%. Here are 3 reasons why many people work with real estate agents:

Why is an estate agent worthwhile when selling real estate?

1. Time saving
2. Discretion in sales
3. Background check of interested parties

Time saving

Selling a property requires a considerable amount of time, from preparing the documents to organizing viewing appointments and negotiations. An estate agent takes on these tasks and relieves the seller considerably by handling the entire sales process professionally and efficiently.

Discretion in sales

Many sellers value discretion when selling their property, whether for personal reasons or business considerations. An estate agent can help to keep the sales process discreet by filtering potential buyers and only contacting serious interested parties. In addition, an agent’s experience and expertise can ensure that sensitive information about the property and the sales process is kept confidential.

Background check of interested parties

An experienced estate agent has the necessary resources and knowledge to thoroughly vet potential buyers. This includes, among other things, credit checks to ensure that they are serious prospects, as well as checking their intentions to buy to avoid wasting time with unreliable prospects.

Nothing is worse than an almost perfect deal that falls through just before the notary and everything starts all over again.

That means…

The commission is usually based on the typical rates of the respective federal states and is often reduced for high-priced properties. This makes it possible to keep the cost of the sale within reasonable limits, while at the same time using the services of a professional estate agent to ensure the best price and the smooth completion of the sale.

Selling an apartment building in Düsseldorf: step by step

Let’s start with the basic question: How much is your apartment building in Düsseldorf actually worth? Find out all the steps of the sales process, from the valuation to handing over the keys.

Determine the value of your apartment building

The value of your property depends on various factors, including the location, the size of the apartments and the condition of the building. A realistic sales price is crucial for a successful sale.

How to value an apartment building

The valuation of an apartment building is based on specific methods such as the comparative value method, the asset value method and the income capitalization method. A combination of these methods provides a realistic market value. The principle is the same for all districts, whether Stadtmitte, Pempelfort, Derendorf, Golzheim, Oberkassel, Unterbilk, Friedrichstadt, Bilk, Carlstadt or Flingern-Nord.

At least two of these methods are usually used to determine an exact value.

• Valuate apartment building
• Typical evaluation procedures
• Free evaluation by experts

Selling in Düsseldorf: What to look out for?

When selling your apartment building in Düsseldorf, you should consider a few important aspects:

1. Location and property prices: The target group of buyers depends heavily on the location and current property prices.
2. Documents: Make sure that you have prepared all relevant documents such as floor plans, land register excerpts and tenant lists.
3. Good contacts or an estate agent: An experienced estate agent can help you to organize the sales process efficiently and to approach the right buyers.

Location and property prices: The buyer target group in Düsseldorf

Düsseldorf is an attractive real estate market with various districts and a high demand for residential space(A-location). The target group of potential buyers is looking for long-term investments and is prepared to pay corresponding prices.

You need to reach people who focus on long-term investments and do not need immediate cash flow.

Documents: Floor plans, land register excerpt, tenant lists, etc.

Before you start the sales process, make sure you have all the necessary documents for the property sale ready. This includes, among other things:

1. Land register extract
2. Parcel map
3. Building plans and building permits
4. Refurbishment status
5. Tenancy agreements and tenant list
6. Operating cost statements
7. Energy certificate
8. Status report or expert opinion

Good contacts or a good broker

As apartment buildings in Düsseldorf often fetch high prices, it is advisable to consult an experienced estate agent. An estate agent has the necessary contacts and can help you to approach the right buyers and achieve the best possible price.

Ultimately, it is always a personal question as to whether you want to sell with or without an estate agent.

Taxes when selling in Düsseldorf: What will you have to pay?

A quick look at the tax aspects of selling your apartment building in Düsseldorf:

1. Speculation tax: Take into account the speculation period for tax-free sales.
2. 3-object rule in Düsseldorf.
3. Differences between asset deals and share deals: effects on taxation.

Speculation tax: selling tax-free?

The speculation period is generally 10 years for rented properties. If you sell within this period, you must pay tax on the profits. After the period has expired, the sale is tax-free.

Further details on the 3-property rule and asset deals vs. share deals can be found in our article here.

Real estate & tax coaching

Do you need further support with the sale of your apartment building in Düsseldorf? We offer real estate and tax coaching by experts and investors. Contact us for more information:

• Real estate coaching
• Real estate tax coaching
• Contact us

Also discover our resources for real estate beginners:

• Real estate beginners