Property buyers often overlook or underestimate the fact that they will incur additional costs on top of the purchase price. This is because not all costs associated with buying a property are immediately apparent. Read our article to find out everything you need to know about this topic.
Incidental purchase costs are fees and expenses that are incurred during the transaction of a property in addition to the purchase price. These are often overlooked or underestimated by buyers. Incidental purchase costs are all costs that are incurred in addition to the purchase price of the property. In an international comparison, ancillary costs are particularly high in Germany when buying and selling real estate.
What are the most typical ancillary purchase costs?
The ancillary purchase costs are calculated as a percentage of the purchase price of the property:
- Real estate transfer tax (3.5 percent to 6.5 percent of the purchase price)
- the notary's fee and the land register costs (1.5 to 2.0 percent of the purchase price)
- the brokerage fee (up to 3.57 percent of the purchase price)
Builders should expect further ancillary purchase costs, for example:
- the building permit (around 0.5 percent of the construction sum)
- the development costs (depending on the scope)
- builder's liability (around 0.1 percent of the purchase price)
- building insurance (around 0.12 percent of the purchase price)
What is the breakdown of the incidental purchase costs?
The amount of ancillary purchase costs is influenced by various factors, including whether it is a purchase or a new build, the purchase price itself and the federal state. The main reason for the varying costs in the different federal states is above all the land transfer tax, which varies between 3.5 and 6.5 percent in the federal states and accounts for a considerable proportion of the ancillary purchase costs.
To get an idea in advance, as a buyer you can expect incidental purchase costs of around ten percent of the purchase price. Roughly speaking, for a property with a sales value of 300,000 euros, you can expect incidental purchase costs of around 30,000 euros.
Incidental purchase costs and external financing
Banks do not cover the financing of ancillary costs when buying a house. This can be problematic, especially with external financing. It is therefore important for you as a buyer to have sufficient equity to cover the additional costs.
Careful preparation is of paramount importance when buying a property. For this reason, it is advisable to seek the support of an experienced local real estate agent at an early stage.
Would you like to buy a property? Let us advise you as your local quality estate agent. Make an appointment with us, we are at your disposal!
Notes
For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.
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