What the Lukinski Rating evaluates — and what it doesn’t

The rating bundles structural location factors into a single grade: population development, economic strength, infrastructure, labor market, and rental price dynamics. Two time periods are considered in parallel — the last ten years as a short-term trend and the last 30 years as a long-term foundation. This results in a grade that filters out short-term hype and highlights genuine structural strength.

The Five Core Factors in Detail

• Population development: Growth or shrinkage of the population, including age structure and migration balance
• Economic strength: GDP per capita, unemployment rate, tax revenue, major employers
• Infrastructure: Transport connections, education, healthcare, digitalization
• Rental price dynamics: Development of cold rent per m² over ten and 30 years, comparable to the rent index
• Price level: Ratio €/m² compared to the national average, balanced with the standard land value

What the Rating deliberately omits

Microlocations within a city, individual property quality, or the personal real estate financing are not part of the rating. An A+ city does not protect you from a poor property in a bad street — and in a C city, the right apartment building can perform significantly better than the city average. The rating is therefore a preliminary selection, not a free pass.

City Rating vs. Neighborhood Rating: The Decisive Additional Filter

Berlin is rated as an A location — yet Mitte, Prenzlauer Berg, and Charlottenburg are effectively A+, while Marzahn-Hellersdorf, Hellersdorf, and parts of Spandau are more appropriately rated as C. The same applies to Hamburg (Eppendorf vs. Billstedt), Frankfurt (Westend vs. Griesheim), or Leipzig (Südvorstadt vs. Grünau). Anyone who only uses the city rating may end up buying a D property at A+ prices.

• Rule of thumb: Within an A city, neighborhoods can differ by up to two rating classes
• Indicators of Neighborhood Quality: Purchasing Power Index, Social Welfare Rate, Average School Grades, Vacancy Rate
• Practice: City Rating for Preliminary Selection, Neighborhood Research for Property Decision

The Rating Scale in Direct Comparison: Return vs. Appreciation

Each rating class follows its own investment logic. A locations are appreciation investments with low ongoing return, C and D locations are cash flow investments with higher risk. The following table shows typical key figures per class — gross yields, purchase price factors and realistic €/m² ranges.

The simplest rule in location investment: The higher the gross yield, the lower the value appreciation — and vice versa. Those looking for both at the same time buy in the B+ segment.

City List: Example Assignment by Rating Class

The following overview shows typical example cities per class. Important: The exact classification can shift due to demographic and economic developments — the list serves as a guide, not as a binding recommendation. A complete database of all nearly 700 cities can be found in the main directory of the rating.

Note: The assignments are illustrative. Within each class there are ranges, and some cities are in transition — see the section “Class Transitions” below.

A+ Hidden Champions: Value Appreciation Instead of Cashflow

Munich, Hamburg, Frankfurt, Stuttgart, Dusseldorf — the A+ locations are considered the safest investments, but are often a trap for beginners. A purchase price factor of 35 means: The gross yield is only about 2.9%. After repayment, interest and reserve for maintenance, the ongoing cash flow is often negative — you pay every month.

When A+ Still Makes Sense

• High Equity Ratio: At least 40 % Equity, so that the cash flow does not turn negative
• Inflation Protection: For those who want to protect wealth from inflation, not actively build it up
• Succession planning: Long holding period, later use inheritance tax strategies
• Liquidity: Resale in A+ locations is also possible in crises
• Rent security: High creditworthiness of tenants, low rent default rate

Typical trap — precisely calculated

A buyer finances a 65 m² apartment in Munich at 6,150 €/m² (purchase price 400,000 €) with 80,000 € equity. With 18 €/m² cold rent (1,170 € monthly rent, 14,040 € annually) and an annuity of about 18,500 € annually (3.8 % interest, 2 % amortization on 320,000 €) a running loss of about 4,500 € per year is generated — before property management fees, non-reimbursable shares and rent default buffer are taken into account. After all additional costs, a negative cash flow of 6,000 to 8,000 € annually remains realistic. The appreciation must more than offset this loss over the entire holding period — this has historically worked in Munich, but is not a natural law.

Quiet risks in A+ locations

• Rent control + rent cap discussion: political risks stronger than in B/C
• High service charges: often 4 – 5 €/m² in premium locations, of which 1.50 – 2 €/m² not recoverable
• Renovation pressure: old buildings with high energy inefficiency
• Value correction risk: after interest rate hike, strongest price declines in top locations

The B+ gap: The best risk-return ratio

The insider area of the rating are the B+ and A- locations: Leipzig, Dresden, Nuremberg, Münster, Karlsruhe, Mannheim, Bonn, Augsburg, Erlangen. Here you will find purchase price factors between 20 and 25 with stable rental demand and realistic value increases of 2 – 4 % per year. The ratio of current return and asset growth is structurally best in this class.

Why B+ is the sweet spot for many investors

• Rent control often more moderate than in top 7 metropolitan areas
• Less competition from institutional investors
• Purchase ancillary costs: 9 – 12 % depending on the federal state — calculate in advance with the purchase ancillary costs calculator
• Student cities with stable rental demand across economic cycles
• Appreciation reserve through catch-up effect compared to A-cities
• Large employer anchors: Siemens (Erlangen), BMW (Regensburg), SAP (Walldorf-Mannheim) structurally stabilize rental demand

Example calculation B+ location Leipzig

An 75 m²-Apartment in Leipzig for 220.000 € (≈ 2.930 €/m²) with 9 €/m² cold rent (8.100 € annually) results in a gross return of approximately 3.7 % with a factor of about 27. With a high-quality location at 11 €/m², the return increases to 4.5 %. With 25 % Equity (55.000 €) and 3.8 % interest, the cash flow is neutral to slightly positive depending on the amortization rate. Important: The rental level in Leipzig has more than doubled in 15 years — the actual leverage lies in the rent increase over the holding period. Compare your values with the local rent return before you invest.

Anker-Factor: What structurally stabilizes a B+ city

• University with 20.000+ students: dau
  ]]> https://lukinski.com/speculation-tax-real-estate-sale-of-land-apartment-house-incl-amount-deadline/ Tue, 04 Jan 2022 14:00:26 +0000 https://lukinski.de/speculation-tax-real-estate-sale-of-land-apartment-house-incl-amount-deadline/ How much is the speculation tax? When is speculation tax payable? Or when is there no speculation tax? This tax is important when you sell a property. No matter if it is a plot of land, an apartment, a house or an apartment building. Learn more about real estate sales here : Taxes.

  Speculation tax simply explained

  The name says it all, this tax is intended to limit speculation in the real estate market. Therefore, the legislator says: If you buy a property, you can only sell it tax-free after X years. X = years differ depending on whether you bought the property as an investment (rent) or live in it yourself (owner occupation).

  Profits over 600 euros (tax-free amount, EStG § 23) must be declared in your tax return. You enter the profits in the annex “Other income”.

  Let’s get back to the Frist difference.

  Distinction: renting (capital investment) / own use

  The speculation period differs depending on whether you buy a property as an investment to rent it out. Or whether you buy a property for your own use, i.e. you live in it yourself.

  Speculation period:

  • Third party use – 10 years
  • Self-interest – 3 years

  Speculation tax only applies to private sales

  The tax can be found in the Income Tax Act (EStG), §22 Types of other income, more precisely in §22 paragraph 2: “Income from private sales transactions within the meaning of § 23;” – so it is a tax that is levied only on private sales.

  The law:

  • § 23 Private sales transactions – external

  If you sell commercially, you are taxed differently. Therefore, you should also know the 3-object rule. It states that who sells 3 properties within 5 years, falls under the commercial real estate trade.

  

  Example: Time limit for capital investment / personal use

  Directly two more practical examples on speculation tax.

  Speculation tax capital investment

  Speculation tax applies – you buy a property at the age of 42, rent it out and sell it at the age of 50, then you have bought and sold the property within eight years. Accordingly, speculation tax is incurred.

  • < 10 years held = speculation tax

  Speculation tax does not apply – you also buy your property at the age of 42 and sell part of it at the age of 53. So there are more than 10 years between the purchase and sale of the property. Accordingly, no speculation tax is incurred.

  • > Held for 10 years = No speculation tax

  Speculation tax self-interest

  In the case of personal use, the time periods change to a period of 3 years. Everything else remains the same, including the amount of speculation tax.

  Speculation tax amount

  Now to the most important question, what is the tax on the sale?

  What is the speculation tax?

  There is no fixed tax rate for speculation tax. Your tax office calculates the amount with your respective tax level.

  Own income tax rate at 40%

  • Profit from sale: 20,000 euros
  • Speculation tax (40%): 8,000 euros

  Back to the real estate encyclopedia.

  ]]> https://lukinski.com/stuttgart-most-expensive-street-in-ideal-location-close-to-the-city-centre-in-the-countryside/ Tue, 08 Jun 2021 09:42:05 +0000 https://lukinski.de/stuttgart-most-expensive-street-in-ideal-location-close-to-the-city-centre-in-the-countryside/ Stuttgart: In Stuttgart there are numerous beautiful places with equally beautiful streets and properties such as villa, old building apartment, maisonette apartment or even the one or other half-timbered house. The big city in the south of Germany attracts more and more people and especially the outskirts are very popular. The most expensive streets in Germany are in Berlin, Hamburg, Munich but two also in Stuttgart. You want to buy a property or a house here? Find out everything about the most exclusive streets in Germany, what makes them so special and above all: how much a square metre costs here. Here you can get back to the main page with the most expensive streets in Germany.

  Villas & large properties: Why Stuttgart is so popular.

  Living close to the city has always been very popular, but families in particular prefer a quieter and more family-friendly environment. If you are currently looking for a suitable property in Stuttgart, you should definitely take a look at the two most expensive streets. Here you will find numerous large properties, including villas and perfect locations. Close to the large green area “Feuerbacher Heide”, numerous schools and daycare centres as well as several sports clubs, you can live well and prosperously here, especially with children, and despite this, you can quickly reach the city centre.

  List: the most expensive streets in Stuttgart

  Before we go into the most expensive streets in Stuttgart with information such as location and prices per square meter: Here is an overview of the most expensive streets with the associated district. The purchase prices for real estate here range on average up to €10,000 per square metre.

  • At the Bismarck Tower (Stuttgart-North)
  • Feuerbacher Heath (Lenzhalde)

  

  At the Bismarck Tower: a lot of space close to the city centre

  The street “Am Bismarckturm” is located north of Stuttgart city centre and borders on the green area Feuerbacher Heide. In the middle of the street is the Bismarck Tower, which was built in honor of Bismarck. From there a residential street leads to the right and left side, which is characterized by large properties with many villas. The expensive street is located directly next to the Feuerbacher Heide, a green area, which lies to the north of the street. So if you own a property here, you have a quick connection to the city centre and still live in the green and with plenty of space. This area is therefore ideal for families or senior citizens, for example in an apartment or granny flat.

  The price per square metre here is

  Maximum price up to 10.000€/ sqm

  Here you will find top adresses like:

  • Bismarck Tower Stuttgart
  • The Tent Theatre Project
  • Feuerbach Heath

  At the Bismarck Tower Stuttgart (Map):

  Get a picture of the surroundings yourself and explore the environment in a virtual way!

  Feuerbacher Heide: ideal place for families

  Feuerbacher Heide is located northwest of Stuttgart city centre and is situated in the Lenzhalde district. The street is surrounded by numerous large properties and villas and offers an ideal location in addition to the attractive real estate on offer. Feuerbacher Heide is on the outer edge of the city, yet the city centre can be reached in just a few minutes by car or public transport. In addition, this residential area is ideal for families, as you live close to a large green area and have schools, daycare centres and numerous sports clubs in the immediate vicinity.

  The price per square metre here is

  Maximum price up to 10.000€/ sqm

  Here you will find top adresses like:

  • Tennis Club Doggenburg eV
  • Feuerbacher Heide (green space)
  • Villa Levi

  Feuerbacher Heide in Stuttgart (map):

  You are interested in a property in the Feuerbacher Heide, but you don’t have time to see it in real at the moment? No problem! Here you can explore the expensive street in a virtual way.

   

  ]]> https://lukinski.com/sell-property-taxes-apartment-house-land-speculation-tax-checklist-more/ Sat, 22 May 2021 17:41:30 +0000 https://lukinski.de/sell-property-taxes-apartment-house-land-speculation-tax-checklist-more/ Taxes when selling real estate – When selling a property, whether a condominium, house, apartment building, commercial property or land, you will learn everything you need to know about taxation when selling real estate: Who pays the real estate transfer tax? How high is the speculation tax? Plus tax optimization when selling in the form of a GmbH and holding company. Real estate and taxes! PS: My tip: the right experts and real estate tax coaching (not from a tax consultant, but from investors with practical experience). I will be happy to put you in touch with my experts, just write to me: Contact.

  Real estate transfer tax: buyer or seller?

  The first important question for those selling for the first time: As a seller, do you have to pay land transfer tax? Good news! This tax is payable by the buyer.

  Buyers pay land transfer tax, not you as the buyer.

  As a rule, the real estate transfer tax ranges between 3.5 percent and 6.5 percent, depending on the federal state in which the property or plot of land is located. For quick orientation, we have summarized the real estate transfer tax rates for all 16 federal states here, with example purchase prices from 1 to 5 million euros, from Bavaria to Hamburg.

  • Real estate transfer tax – table and calculation example

  This tax is important for you:

  Speculation tax: selling tax-free, when?

  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 after 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?

  

  Commercial property: Value added tax

  When selling a commercially used property that is subject to VAT and is rented out, the seller must correct the input tax deduction. If the new owner continues to let the property, no refund of input tax will be granted.

  1. Commercial properties subject to VAT require an input tax adjustment on sale
  2. The continuation of the rental does not affect the input tax refund for the seller

  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).

  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 a property, after which I will explain more about holding companies and taxes on the sale.

  

  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 is the advantage? 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.

  Taxes on gifts and inheritance

  If your property is an inherited or gifted property, this also raises the question: What taxes are due? As with properties you have purchased yourself, speculation tax may also be payable on the sale of an inherited property.

  However, one special feature should be noted:

  Thus, the speculation period does not begin on the day the property was inherited or given away, but on the day it was purchased by the original owner.

  If the property is a newly inherited rental property that was acquired more than 20 years ago, the speculation period is deemed to have expired. There is therefore no speculation tax, even if you have only recently inherited the property.

  To summarize:

  • Speculation tax may apply
  • Only for rented or leased properties
  • The speculation period begins on the day of the original acquisition

  Save tax with real estate

  Reading tip! Save taxes with real estate – Learn about taxing taxes! You are the greatest financial professional you can find for your individual setting (private and business). Calculating taxes yourself is the tool to minimize your own tax burden.

  The aim is therefore to convert taxes into private assets

  The less tax you have to pay to the tax office, the faster you can build up your private wealth. You can find out more about tax optimization in this guide.

  • Save tax with real estate

  

  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
  ]]> https://lukinski.com/civil-law-partnership-gbr-formation-liability-legal-form-management-taxes/ Tue, 23 Feb 2021 12:21:24 +0000 https://lukinski.de/civil-law-partnership-gbr-formation-liability-legal-form-management-taxes/ Gesellschaft bürgerlichen Rechts (GbR) – The Gesellschaft bürgerlichen Rechts is a German legal form which is established by two or more persons for a certain period of time in order to conduct a certain business together or to achieve a common goal. It is therefore always for a specific purpose and usually exists only as long as the joint venture has not yet been completed. As the name suggests, it is subject to civil law and is therefore often referred to as a BGB company. Tax advisors help with the formation, as well as with all taxes in Germany. All about the GbR. Back to the individual: Legal forms.

  Civil law partnership: formation, advantages and disadvantages

  In the following, you will find out everything you need to know about setting up a GbR. How do you become a partner in a GbR? What are the differences between incomplete and complete companies? What are the advantages? What are the disadvantages? How do I set up a company? What is a company? You’ll get answers to all these questions and more – explained simply and quickly. Plus everything you need to know about taxes and real estate trading.

  If you are considering forming a civil law company, you first need to know about the formation process: Who can form what exactly, when and to how many… what are the differences and similarities between the various civil law companies? It is equally important to know the advantages and disadvantages of a GbR: From profit distribution to saving taxes – the seven most important formation criteria for you at a glance.

  What are the founding criteria?

  1. Number of shareholders
  2. Management
  3. Foundation
  4. Company name
  5. Funding
  6. Liability
  7. Profit distribution

  Learn everything important about it here! In addition, you will find all German types of companies and legal forms, as well as tips on how to start a company, including the special case of real estate GmbH, family foundation & Co.

  BGB companies at a glance

  In the entrepreneurial world, there are many different forms of business you can choose from. They are roughly divided into two categories, namely sole proprietorship and companies, which in turn are divided into incomplete companies – these include dormant companies and BGB companies – and complete companies – partnerships, corporations and some more.

  The civil law partnership – GbR for short – is one of the so-called incomplete partnerships and is often also referred to as a BGB partnership because, unlike the complete partnerships, it is not subject to the German Commercial Code (HGB) but to the German Civil Code (BGB). The GbR is an uncomplicated form of corporate law because it can be founded informally and a minimum of only two founding members is required. Since the formation of a GbR is for the purpose of jointly conducting a specific business, it is also referred to as an occasional company.

  GbR between private persons

  If you want to form a civil law partnership, there are different options for you and your co-founder(s). In fact, most people – knowingly or unknowingly – have already been part of a BGB company at one time or another: if, for example, you form a car pool with your colleagues or go on holiday together with your friends and split the costs between them, you have formed an occasional company in the legal sense. For a common goal, you have joined forces with at least one other person, temporarily or for a longer period of time, and contributed to the fulfilment of this goal under the premise of equality – in this or a similar way, a civil law partnership is informally formed between private individuals.

  GbR among freelancers

  You are already self-employed and want to found a GbR? No problem! Even between sole traders, the formation of a civil law partnership is not uncommon: Especially in the healthcare and legal sectors, doctors and lawyers like to join forces for a longer period of time. They establish a civil law partnership among freelancers in order to increase their chances on the market or to strengthen their competitiveness or simply to save costs.

  GbR among merchants & banking syndicate

  As a businessman or businesswoman, you can also join forces with like-minded people and set up an occasional company. For example, if you have a large construction project that you as a craftsman cannot handle alone, you can join forces with other craftsmen for this customer or project to tackle the property together. Once the construction project is complete, everyone goes their separate ways. In this case, it is a matter of founding a civil law partnership among merchants. A special feature here is the merger of banks: If several banks form a GbR – for example, for the purpose of easier organisation of the share issue when a public limited company (AG) is re-established – this is referred to as a banking consortium.

  BGB companies in brief:

  • GbR between private persons
  • GbR among freelancers
  • Partnership under business
    • Banking syndicate

  

  Formation process of the GbR: From the number of shareholders to the distribution of profits

  Regardless of whether you are a private individual, a freelancer or a merchant: The process of forming a civil law partnership is the same everywhere: For one thing, you need at least one other person to be able to form a GbR. The claim that a GbR is more or less a sole proprietorship, only with more people, is therefore no coincidence. But apart from the question of liability, these two legal forms have little in common.

  Doing business together from 2 persons

  Although it is possible to appoint a single managing director from among the BGB partners by agreement, all partners usually take over the management jointly and also make joint decisions.

  The foundation itself requires a tax identification number – in short: tax ID – which you can apply for at the tax office responsible for your administrative area. Furthermore, you must apply for the registration of a small business at your responsible trade office, which usually costs you about 10 to 65 euros for processing. As a small business BGB company, you are restricted in terms of turnover – this means that you may generate turnover up to a fixed maximum limit of currently 250,000 euros per year. For higher amounts, the civil law partnership is automatically converted into a general partnership – OHG for short – for which entry in the commercial register is mandatory.

  Company identification: Full name + GbR

  Since you are not registered in the commercial register as a GbR partner, you cannot officially trade. This means that your company does not have a company name, but only a company designation. The company name must consist of your full first name and your surname plus the suffix “GbR”, which indicates the legal form of your BGB company. You are free to expand your company name by naming the industry and/or an imaginary name.

  Financing, Liability & Profit

  The financing is entirely at your discretion, so you can theoretically do without any start-up capital. However, it is advisable to have certain reserves and to draw up a financing plan in order to be financially prepared in case of unpleasant surprises. The company risk is borne jointly by all partners and they are liable for both business and private matters. Therefore, if something goes wrong and the BGB company falls into arrears and financial difficulties, you must – even in the case of wrong decisions by your co-partner(s) – take unlimited responsibility with your private assets.

  Just like the entrepreneurial risk, the profit is also distributed equally. With two founding members, each of you receives 50 percent of the profit. If there are three or more partners, the profit is distributed accordingly per head.

  Advantages: Winning by heads, team decision & joint liability.

  After presenting the typical characteristics of a BGB company, you have certainly already recognized the advantages that this legal form offers you: The foundation is relatively uncomplicated and you do not need any start-up capital. You are active as a team together with your co-founder(s): You make all company-relevant decisions together, bear the liability risk jointly and share profits equally among yourselves.

  • Fast and uncomplicated foundation
  • Flexible share capital
  • Head split
  • Liability risk in the team
  • Decisions with little coordination with others
  • No disclosure of business figures

  Disadvantages: Full liability, turnover restriction & OHG conversion.

  The disadvantages of setting up an occasional company can also be quickly identified: On the one hand, you do not have sole decision-making power and must coordinate with your staff of partners. Nevertheless, in case of doubt, you must be fully and completely liable – even privately! even if you were not responsible for the losses. Thirdly, as a GbR you are limited in turnover and have to be careful not to unintentionally change into a OHG. Last but not least: Since a GbR is purpose-bound, a dissolution can be enforced without much effort – it is not made for eternity.

  • No sole decision-making power
  • Full liability (incl. private assets)
  • Limitation of turnover up to 250.000 Euro per year
  • Automatic conversion into OHG
  • Simple dissolution of the GbR

  Evaluation: Start-up without bureaucracy & share capital

  After comparing the advantages and disadvantages, it becomes clear that if you like to work in a small and familiar team to achieve a common goal and do not want to overcome any major bureaucratic hurdles, you can get off to a fast and easy start as a GbR. Profits are shared fairly and losses are borne jointly, so that businesses with a manageable risk are particularly suitable as objectives. In addition, a GbR makes sense for entrepreneurs who do not have the necessary share capital for a corporation and/or have a general partnership as their goal.

  

  Immobilien GbR: change of legal form, asset management & Co

  You don’t think the idea of a general partnership is a bad idea at all, and now you’re wondering how to combine your partnership with real estate? From form change tricks and private contributions to corporations to real estate brokers and asset management companies. All essential information on real estate partnerships, real estate GbR and real estate KG for you in a nutshell.

  Small tip: When acquiring and/or managing real estate, make sure that all details are clearly stated in the partnership agreement. Due to the principle of joint, unlimited and direct liability, you should also make sure that your managing partners are persons with comparable creditworthiness – otherwise there could be difficulties with financing and creditworthiness.

  Variant 1: Save taxes through change of legal form trick

  As an individual, you would like to contribute your property to a limited liability company (LLC) or other corporation, but the tax levies are too high for you? Then you should consider transferring your property to a partnership. The advantage: registered partnerships can be easily converted into corporations by means of a change of form and you can save the real estate transfer tax!

  Change of legal form to a registered partnership

  As a partnership under civil law (GbR), you can convert your property into 100 per cent GbR shares as a 100 per cent shareholding and, in the next step, carry out the change of form to a general partnership with entry in the commercial register. This turns the GbR into a full company and, above all, also into a registered partnership, which is the basic prerequisite for the conversion into a GmbH. But watch out: You need another person for the formation, who temporarily joins the company without deductible.

  Change of legal form to a corporation after 5 years

  The change of legal form to a GmbH is again tax-free in terms of the identity of the legal entity, so that you remain exempt from real estate transfer tax and can still transfer your private property to a corporation. You only have to wait until the five-year lock-up period has expired, because otherwise taxes will still be due retroactively in accordance with the Real Estate Transfer Tax Act (GrEStG). If everything goes smoothly, you are still 100 percent owner and your co-founder can leave the GmbH without any problems.

  Variant 2: Real estate agent with business licence

  If you want to become a self-employed real estate agent, it’s not that easy. The profession of real estate agent is subject to the trade obligation and is not one of the liberal professions. This means that in order to be able to pursue this activity, you must first apply to the trade licensing office for permission and hope for a positive light. The official permit is required by law, for example to be able to assess your reliability in advance.

  Real estate agent OHG, GbR & KG

  Partnerships can also operate as real estate agents. However, without their own legal personality, OHGs, GbRs and KGs must obtain an official permit for each individual managing partner. In addition to the application form for permission, further documents must also be submitted. These include:

  • A police clearance certificate – available on request from the Residents’ Registration Office;
  • An extract from the Trade Central Register – available on request from the Ordnungsamt;
  • A tax clearance certificate – available on request from the tax office;
  • A certificate of no current insolvency proceedings – available on request from the local court;
  • A certificate of missing entries in the debtors’ register – available on request from the local court.

  A certificate of competence can also be provided on a voluntary basis.

  Variant 3: Asset-managing partnership

  If you want to be active in the area of surplus income – i.e.: income from non-self-employed work, capital assets, renting and leasing or other income – an asset-managing partnership could be just right for you. Here you can typically either use the legal form of a GbR or fall back on trading companies regulated in the HGB such as the OHG or KG. Mixed forms such as the GmbH & Co KG are also conceivable in principle, but mean further regulations and requirements.

  Participation, say & tax advantages

  An asset-managing partnership makes sense if several real estate investors want to manage their real estate holdings jointly. The aspect of ensuring succession in the event of inheritance is also interesting here. The partnership agreement determines how much say the individual partners have – decisions are often made on the basis of shares, but even partners with a small shareholding can gain a dominant voting right – for example, if they have enormous expertise, professionalism or experience.

  Tax advantage of such an arrangement? The capital-forming partnership is not the same as the tax object: each partner is taxed individually and all income taxes as well as taxes from inheritance, sale or gratuitous transfer of partnership shares must be reported by each partner individually for tax purposes.

  Taxes for BGB partners: income tax, VAT & trade tax

  As a GbR partner, you need to know about some types of taxes, because with the establishment of your company, you receive income from your business and must of course also pay tax on this. Tax law stipulates that in addition to the income tax of each partner, further duties must be paid for turnover tax, unless the GbR makes use of the small business regulation. In addition, trade tax is due for commercial enterprises with an annual income of more than 24,500 euros. A GbR among freelancers remains exempt from the trade tax obligation.

  • Income tax (ESt)
  • Value added tax (VAT)
  • If applicable, trade tax (GewSt)

  You can find out what taxes you can expect with a real estate corporation here:

  • Save taxes on real estate

  

  Conclusion: Civil law partnership – for whom is it worthwhile?

  If you are prepared to join forces with other trustworthy people to start your own business quickly and easily, you do not need enormous financial reserves and also pay relatively little tax on your profits. A GbR is therefore ideally suited for young freelancers who want to take their lives into their own hands, not only dream of self-realisation and do not want to wait until they have saved up the necessary start-up capital.

  From a real estate point of view, a BGB company is particularly worthwhile for beginners who would prefer to invest their capital directly in the purchase of real estate instead of laying down the share capital for a corporation. If you are successful, however, you should consider converting the casual partnership into a general partnership – if only to reduce the liability risk – or contributing the GbR as a contribution in kind to a GmbH.

  You can find out more about general partnerships and limited liability companies here:

  • General partnership (OHG)
  • Limited liability company (GmbH)

  Learn for free: Start a company & legal forms

  Besides the civil law partnership (GbR), there are a few other alternative types of companies that could be interesting for you as a founder! You want to learn more about starting a business? Learn more about share capital, taxes and the advantages and disadvantages of the different types of companies.

  Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:

  1. Legal forms: List
  2. Founding a company: Procedure, costs and overview

  Legal forms: List

  Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

  • Legal forms: List

  Company types in detail:

  • Sole proprietorship
  • Registered businessman / registered businesswoman (e. K.)
  • General partnership (OHG)
  • Limited partnership (KG)
  • Entrepreneurial company (UG)
  • GmbH: Limited liability company
  • Real estate GmbH / Asset management GmbH
  • Stock corporation (AG)
  • Real estate stock corporation (REIT-AG)
  • Societas Europaea (SE)
  • Foundation / Family Foundation

  

  Starting a company: Procedure, costs and checklist

  Founding a company (real estate) – You want to found your first company? Requirements for you as a founder, share capital, shareholder agreements, costs for the foundation, legal forms and checklists. This sounds complicated for beginners, but it is actually quite simple. The process of founding a company is usually relatively the same. I have summarized the foundation here once in simple steps, for you. Learn how to start your own business. After the great guide to all legal forms or types of companies, today a detailed look at the establishment of a (real estate) company for beginners.

  • Form a company

  

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