Selling an apartment building in Cologne: step by step

Let’s start with the question: How much is your apartment building in Cologne 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 current condition of the building, with its typical construction defects over the decades. A realistic sales price is crucial for a successful sale.

How to value an apartment building

The valuation of an apartment building is carried out using 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 Cologne: What to look out for?

When selling your apartment building in Cologne, 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 Cologne

Whether Altstadt-Nord, Neustadt-Nord, Lindenthal, Neustadt-Süd, Rodenkirchen, Ehrenfeld, Innenstadt, Porz, Kalk or Mülheim: Cologne is an attractive real estate market with various districts and a high demand for living space. 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 Cologne 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 Cologne: What will you have to pay?

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

1. Speculation tax: Observe the speculation period for tax-free sales.
2. 3-object rule in Cologne.
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 Cologne? 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

Architectural office GRAFT: extra class & future – company

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New prestigious properties are currently being built, as described in the introduction, for example for E.ON and Volocopter. For E.ON GRAFT builds at the new, large E-car charging network and designs charging stations. Another project with a great future is Volocopter, one of the first air cabs that will soon conquer metropolises worldwide. In Germany, too, air cabs are soon to take up their first test flights. But, before we take a look at individual objects from GRAFT, here’s a brief look at the company:

History, founders and establishment in LA

The architecture firm GRAFT was founded by Lars Krückeberg, Wolfram Putz and Thomas Willemeint in Los Angeles, back in 1998. Since then, many flagship projects have been built, especially in Berlin. These include, for example, the KU64 and the BRLO, here in Berlin.

Behind every great undertaking is a higher goal. For GRAFT Architekturbüro, it is said that it was founded as a label for architecture, urban planning, design, music and “the pursuit of happiness,” as it says on the architects’ website.

“the pursuit of happiness”

The founders Lars Krückeberg, Wolfram Putz and Thomas Willemeint, have GRAFT now expanded to over 150 employees, 3 of them even in Beijing. Thus GRAFT is already in the future market: China. While airports in Germany have gladly times 10 years building time, one realizes airports here 3x so largely, in 10 months building time.

Tip: Read more about Investing in China (real estate).

Interior Architecture:

Building to the heights:

Architecture firm at a glance

GRAFT company at a glance:

• Founders: Lars Krückeberg, Wolfram Putz, and Thomas Willemeint
• Founded: 1998
• Founding location: Los Angeles, California (USA)
• Headquarters: 3 continents
• Employees: 150 (as of 2021)
• Projects (new): E.ON charging stations, Volocopter

Graft about itself:

“We refuse the traditional, virtual and real boundaries in the world of work and are thus able to offer more opportunities and an ever-expanding range of solutions in our work.”

Source: graftlab.com

Awards and prizes

In 2015 alone, it rained awards, including the “Red Dot Design Award, Communication Design, Visualization for Objekt Carpet”, but also the “Iconic Award 2016, Interior Innovation, CAELA Lighting System”. The last year, with official list can currently be found from 2019. Here is a small excerpt, with other prizes and awards won by GRAFT architecture office.

Awards and prizes, excerpt 2019:

• Award German Housing, Paragon Apartments, 1st prize
• Iconic Awards 2019: Innovative Architecture, Natureisstadion Schierke, Winner
• German Design Award 2019, Natureisstadion Schierke, Special Mention

Graft in Berlin: Tour & Architecture

Let’s start a little city tour, through the districts of Berlin, or two locations with GRAFT villas.

Villa M in Grunewald: boulder, spaceship – unique

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One of the GRAFT designer villas, you can take a drive through Berlin Grunewald, one of the most exclusive districts in Berlin, visit yourself. About this property was also already reported in many, renowned real estate magazines.

In fact, compared to the others, the property is very eye-catching, because very futuristic. The property itself was built with ceramic tiles that were specially made by a company in Potsdam, so each one is truly unique.

From a distance, it looks like a boulder thrown into the plot. The geometric shape, probably makes this villa particularly interesting for men. It reminds both of the erratic block, and of a spaceship. In fact, that’s what architecture is all about:

Not just living, being! Inspiring architecture

GRAFT Villa M is a real statement in Berlin Grunewald. The object fits into the typical Berlin image, straight surfaces, facades, white walls and paints. For anyone who wants to “stand out from the crowd here”, a real investment in unique architecture.

Villa M – frontal view of the object:

Villa M – View from the garden / plot:

Villa in Inselstrasse: Hollywood star as builder

Even more imposing than Villa M in Berlin-Grunewald, however, is a property on Inselstraße. One of the most exclusive spots in Berlin, no 40 properties, private island. Here lives so to speak (also) the Who-is-Who of the Berlin economy. We do not want to name names out of discretion.

More precisely on Schwanenwerder Island, this unusual luxury villa with guest house, boathouse and over 1,000 square meters of living space, plus 10,000 square meters of land. The property here is reminiscent of a runway, extremely imposing, large, long and extends to the lake. Like the villa in Berlin-Grunewald, it stands out completely from the rest of the villas and estates in Inselstraße. No other property is so modern.

The original builder of this imposing villa (Brad Pitt), but then did not move in himself.

The villa, below the wall is water (lake), by the way:

Image credits: Wikipedia / Fridolin freudenfett (Peter Kuley), CC BY-SA 3.0

Location in Berlin:

“Charly Living”: neighborhood at Checkpoint Charlie

There are imposing buildings in the residential sector, including mixed-use properties, for example, in the middle of Berlin at Checkpoint Charlie. This quarter is home to hundreds of residential units. Thus, it is not only an architectural highlight in Berlin-Mitte, but also a place of residence for a great many people. Thus, the architectural office shows that concepts implemented in villas can also be applied in residential construction.

Still, we’re still on the “smaller” projects that the architecture firm is doing.

Future architecture: E.ON, Volocopter & Co.

GRAFT Architect will continue to set absolute standards in the future. Two absolutely distinguishing projects are currently, for example, E.ON and Volocopter.

For E.ON, the architecture firm is currently developing a wide variety of charging stations in a wide variety of environments. In the middle of the Frankfurt skyline, between skyscrapers and banks, in the countryside, right next to the highway, virtually everywhere. A complete charging infrastructure for e-cars is to be created. This will give electric car mobility in Germany a boost and thus also open up a completely new area for GRAFT, in which they are once again pioneers.

Another very interesting project, are the ports GRAFT is currently developing for the air cab provider Volocopter. Volocopter will be the first air cab in Germany and is expected to start activity in a very short time, or rather test it for the time being. The architecture firm won the competition for this worldwide project and is now developing concepts that will enable future air cabs to land on various terraces. This will then include, for example, the typical skyscraper (in Frankfurt) that can be found in any major city. Likewise, ports are built that can be used in harbors (as in Hamburg), meaning they float on water.

That was a little insight, into the work of Graft. Founded in 1998, the architectural firm has over 20 years of experience combined together, with three founders and entrepreneurs. More about the company can be found here: GRAFT Lab.

“How Beautiful” by MarcCain (VR Fashion Show)

The world’s first virtual fashion show – In 2021, virtual humans will be seen on the runway for the first time. That day is today. Pictures speak louder than 1,000 words. Here is the world’s first fashion show with digital models. Created by MarcCain; Digital Models by CM Models / Zoe 101. Read more about virtual influencers (social media agency) here.

Many thanks to MarcCain. Now is the time to go shopping everyone! New outfits and collections are out now on MarcCain!

With the conclusion of a purchase contract, the financing is already under the umbrella. The bills from the broker, notary, land registry and tax office come as soon as the loan is fixed. Because of this, the credit is often underestimated. Back to German Real Estate Overview.

Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

What Percentage are Incidental Purchase Costs?

20% ancillary building costs should be included in the loan at least, in addition to the purchase price, and are quite realistic.

~ 20% of the purchase price

The 4 Biggest Additional Costs when Buying Real Estate

The overview shows the 4 largest additional costs you expect when buying a house. But what other costs are involved in building a house? Find out more here: House construction & the costs that come up.

Fees: Notarization of the Purchase Contract by Notary

The fees for the notary appointment are probably one of the largest items in the additional costs of the house purchase. The notary fees are fixed and may not deviate from these in any direction, but even these are quite high.

~ 1,5% of the purchase price

As a rule of thumb, about 1.5% of the purchase price has been set – and this only for the signature of the purchase contract. So if you purchase a property with a purchase price of 100,000 Euros, the notary’s fee is 1500 Euros, which, in Germany, is usually paid for by the buyer.

The exact fees for notaries in Germany are laid down in the notarial fee schedule, but can also be calculated online.

• Read more here: Notary and Purchase Agreement

Taxes: Real Estate Transfer Tax

As soon as the contract has been signed at the notary and the purchase agreement has been notarized, the buyer will receive mail from the tax office. Next, the purchase tax is demanded from the buyer.

This is incurred somewhat differently. Normally it amounts in Germany round about 3% – 6% of the purchase price of the real estate. Since the land transfer tax is a state tax, meaning each state determines their individual rates land transfer tax rate.

In some federal states, however, such as Hamburg, Berlin and Saxony-Anhalt, it is 4.5% of the property purchase price. For a purchase price of 100,000 euros, for example, you therefore pay another 3500 / 4500 euros for the land transfer tax.

Reading tip: Get to know tax planning options, from cooperatives to family foundations: Save taxes with real estate

Purchase price 100.000 Euro

This debt should be paid immediately, because only when the amount has been received by the tax office will the latter issue the so-called clearance certificate. This certificate is mandatory for the transfer of the new owner to the land register. This is arranged by the land registry office and costs again fees, which are comparatively low.

3.5 – 6.5% of the purchase price

Commission: Brokers Calculate their Share

Whoever buys a property or a plot of land through a real estate agent must of course include the commission to the agent in the overall calculation. You will usually receive the invoice from the real estate agent directly after the notarization.

How high the commission is varies and depends on various factors, such as the region. In most cases it varies between four and six percent of the purchase price of the property.

With a property purchase price of 100,000 euros, you pay between 4,000 and 6,000 euros only for the real estate agent. However, it is important to know that it is definitely worthwhile to negotiate with the real estate agent’s commission, as it is known that this is associated with a large amount of leeway.

A recommendable, total commission of 3.48 percent including VAT is a recommendable and realistic value.

~ 3.48 % of the purchase price

Supplements: Credit Interest and Installment Surcharges

The banks would like to take part in a house sale, of course, and not only through the loan interest rates. In addition to the negotiated loan interest rates, you are charged costs that are additional and usually not expected by the buyer.

These costs are not clearly visible at first glance and therefore banks are deceiving their customers. Such hidden costs can occur in the form of monthly provision interest on the unpaid portion of the total loan.

There, for example, 0.25% is charged, which the customer does not expect and which adds up to the mass. For a loan amount of 100,000 euros, this is about 250 euros per month, which you do not expect.

Additional, Hidden Costs

But there are other hidden costs that you don’t expect. These include account management, which some banks charge as a fee, but also installment surcharges if you get part of the loan paid out, depending on the progress of the construction.

With your loan, pay special attention to exactly what is written in the small print, ask about all unclear points and only sign if you are certain about all obligations.

To be on the safe side, have your bank calculate the so-called total effective interest rate or the actual effective interest rate. There, all service charges are listed in detail and clearly arranged.

Assessor & Renovation – Potential Additional Costs

Another factor that does not apply to all properties is the cost of appraisers and renovators.

Particularly with older real estate it is meaningful to hire an appraiser before the purchase, who examines the real estate down to the lattices. This includes, for example, checks on moisture and pollutants (especially for properties dating from the 1970s). Such appraisals are carried out by independent experts such as architects or civil engineers but also real estate experts.

The costs here are very different, as it depends on the type of expertise and the time required. Depending on how good the report is, possible renovation work in the future may be necessary, which should be incldued in the purchasing price as a reduction. For this reason, these assessments are critical.

Whether it is a new heating, new windows or the restoration of the roof, the costs for this case also vary greatly. Here you should note that there are usually costs for general renovation before moving in. New floors, different wall colors, a new kitchen or even tearing down a wall.

All these things again cost money, which should not be underestimated. Often there are more costs than planned, because something goes wrong, but was more expensive than calculated or small things are missing. Also note that many renovation works cannot be done by yourself. So you need craftsmen and experts to help you and they will of course calculate their working time. Before you decide on a house, think about which work would still have to be done, what you would like to renew and how much the costs for such renovation work will be.

Conclusion: Calculate additional purchase costs

In Germany, for a property with a purchase price of 100,000 euros and a loan of the same amount, expect additional costs of 9,000 to 12,000 euros.

If you do not include them in your loan amount, they must be deducted from your own capital. Such unexpected service charges should not be underestimated and can vary enormously from property to property. The higher the price of the property, the higher the service charges you expect.

• Back to our full guide on Real estate Taxes in Germany.

Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

Grundwerbsteuer Explained: Purchase of Land or Property

As described in the introduction: Whenever a property or part of a property is purchased, land transfer tax is incurred in Germany. The tax is levied on the basis of the Land Transfer Tax Act (GrEStG). The amount of the real estate transfer tax is determined by the federal states. It is therefore a state tax. The respective federal state can therefore decide for itself whether it passes on the tax levied to its local authorities. But first we look at what a Grunderwerbsteuer really even is.

Are you looking at investing in German real estate? Don’t miss our article

• How to Save on Real Estate Taxes in Germany

Grunderwerbsteuer Meaning

Grunderwerbsteuer is a tax on the purchase of real estate. The translation of Grunderwerbsteuer is real estate transfer tax or land transfer tax. Note, in the USA, this concept has different meanings depending on the state (more on that in our article on Real Estate Transfer Tax in the US). How the Grunderwerbsteuer works is explained further below.

Who pays the Real Estate Transfer Tax?

After you have bought your property, the purchase must still be notarized. The purchase contract states who has to pay the land transfer tax: buyer or seller. Without this additional agreement, the law (§13 No. 2 GrEStG) states that first of all the previous owner and the purchaser are tax debtors, i.e. both together, buyer and seller.

After notarization, the notary sends the signed purchase contract to the responsible tax office, which then writes to the party to be charged with the real estate transfer tax assessment. The tax is due one month after notification of the tax assessment. However, the tax office may set a longer payment deadline if necessary (see Grunderwerbsteuergesetz (GrEStG) §15 Due date of the tax).

Grundwerbsteuergesetz (GrEStG): § 13 Tax debtor

Here is a short look at the legal text on real esate purchases according to §13 No. 2 GrEStG. This is our best attempt at a translation, these terms are as similar as possible to the original meaning.

Tax debtors are:

• By Default: the persons involved in a purchase transaction as contractual parties;
• In case of acquisition by operation of law: the previous owner and the acquirer;
• In the case of acquisition in expropriation proceedings: the acquirer;
• In the case of the highest bid in compulsory auction proceedings: the highest bidder;
• In the case of the merger of at least 95 per cent of the shares in a company in the hands of the acquirer: the acquirer;
• In case of acquisition by several companies or persons: these parties;
• In the event of a change in the membership of a partnership: the partnership;
• In the case of an economic interest of at least 95 per cent in a company: the legal entity which holds the economic interest.

Source: Federal Ministry of Justice (as of 09/2020).

Cost table: Tax According to Purchase Price

Status: 09/2020

Tax Rate by State: Amount

• Bavaria – 3,50%
• Berlin – 6,0%
• Bremen – 5.0%
• Hessen – 6.0%
• Lower Saxony – 5.0%
• Rhineland-Palatinate – 5.0%
• Saarland – 6.50% li>
• Saxony – 3,50%
• Saxony-Anhalt – 5.0%

Property Tax Compared to Trade Tax, Income Tax and Sales Tax

Real estate tax is levied on land, but also on hereditary building rights to land, the so-called substance tax. The assessment basis for the land tax is usually the value of the land plot. The tax rate is usually set at the municipal level.

This infographic below shows the tax revenue of German municipalities according to tax types (in billions of Euros). Please note that an English translation was not available. Blue denotes income tax, green is trade tax, purple is property tax, and orange is goods-and-services tax.

Purchase Price – 1.000.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 1 million Euro.

Purchase Price – 1.200.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 1.2 million euros.

Purchase Price – 1.500.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 1.5 million euros.

Purchase Price – 2.000.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 2 million euros.

Purchase Price – 2.500.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 2.5 million euros.

Purchase Price – 5.000.000 Euro

Below a graph for the amount of taxes you will pay based on what state you are buying the property in. The basis is a purchase price of 5 million euros.

Plots, apartments & house in Germany. Classical or exotic: Which property is suitable as an investment? The interview: Real estate as a capital investment. In our city analysis you will find clues as well (see below).

Tip from the real estate agent: You want a purchase price for comparison? Before you evaluate your real estate , use apps from real estate portals. Here you can simply track your location with GPS and the app will show you purchase prices and comparison offers in your area. The fast way to a first, rough evaluation of your property.

Price: Rent, buy, living

Renting, buying, living. Here you will find more information about the population, rental prices and purchase prices in the individual cities:

• Buy and rent: Berlin
• Buy and rent: Düsseldorf
• Buy and rent: Frankfurt
• Buy and rent: Cologne
• Buy and rent: Hamburg
• Buy and rent: Hanover
• Buy and rent: Munich
• Buy and rent: Stuttgart

Tax optimization: Procedure and Knowledge Build-Up

Topic Taxes. This brings us directly to the topic of optimizing taxes. Knowledge about finances and taxes is absolutely essential when buying your first property. Understanding taxes is important, because this is how you can convert taxes into private assets.

How does it Work? An Example for Real Estate Investors

In the case of real estate, for example, this involves lifting platforms for duplex parking spaces. So lifting platforms, where you get e.g. two cars on one parking space. They have a shorter depreciation period. Here, depreciation for wear and tear applies, distributed over the actual useful life, deductible according to the official lists of the Ministry of Finance. Exception expenses up to 800 Euro – without VAT – can be deducted immediately in the year of purchase.

You will of course no longer get such knowledge from your tax consultant. Why should he or she, if he or she knew about it, your tax advisor* would be a millionaire* himself.

Details

More details on optimizing your tax sheet for your real estate can be found in our article on the matter

• German Real Estate Taxes – Saving on your Property Investment