Selling property in Germany: capital gains tax explained (Spekulationssteuer)

If you sell German property at a profit, whether that profit is taxable depends almost entirely on two things: how long you owned it, and whether you lived in it. Get either one right and the sale can be completely tax-free. Get both wrong and the gain is taxed at your personal income tax rate, not a flat capital gains rate. This guide covers how the rule, commonly called the Spekulationssteuer, actually works.

What triggers the tax in the first place

Under Section 23 of the Einkommensteuergesetz (EStG), profit from selling privately held real estate counts as a private sale transaction (privates Veräußerungsgeschäft) and is added to your other income for the year, taxed at your personal rate rather than at a separate flat rate. This is different from how Germany taxes gains on shares or funds, which generally fall under a flat 25% Abgeltungsteuer instead. Property held as a business asset, or sold as part of a trade or business, follows different rules entirely and isn't what this guide covers.

The 10-year rule

The core exemption is straightforward: if more than ten years pass between the notarized purchase contract and the notarized sale contract, the gain is completely tax-free, regardless of how large it is. The ten years are counted to the day from one notarization date to the other, not by calendar year, so it's worth checking the exact dates before assuming you've cleared the threshold. This holding-period rule has stayed unchanged through recent coalition tax discussions, including the CDU/CSU-SPD coalition agreement of April 2025, which left it untouched.

The owner-occupier exemption

You don't need to wait ten years if you actually lived in the property. If you used it exclusively for your own residential purposes in the year of sale and the two preceding calendar years, the sale is tax-free regardless of your total holding period, even if that's well under ten years. Importantly, this doesn't require three full calendar years of residence, living there continuously across parts of three consecutive calendar years, for example, moving in partway through year one and selling early in year three, can be enough to qualify. This exemption doesn't apply if the property was rented out for any stretch of that qualifying window.

How much tax you'd actually owe

If neither exemption applies, the gain is added to your other taxable income for the year and taxed at your personal marginal rate, up to 45%, rather than at a fixed percentage. This means the actual tax bill depends heavily on your total income for that year, the same property sale could cost noticeably more in tax in a high-income year than a lower-income one, which is worth factoring into timing if you have any flexibility over when the sale closes.

How the taxable gain is calculated

The gain is your sale price minus your original purchase price, minus verifiable acquisition-related costs like notary fees, Grunderwerbsteuer, and agent commission, minus the cost of any capital improvements you made and can document. If the property was ever rented out and you claimed depreciation (AfA) against that rental income, that depreciation has to be added back into the calculation, effectively lowering your cost basis and increasing the taxable gain. Ordinary maintenance and repair costs generally don't reduce the gain the way capital improvements do, so keeping clear records of what was a renovation versus routine upkeep matters if you're anywhere near the ten-year mark.

The 1,000 euro threshold, and why it's a cliff, not a phase-in

A Freigrenze, an exemption threshold, applies to your total Section 23 EStG private-sale gains for the year, currently 1,000 euros, raised from 600 euros in 2024 under the Wachstumschancengesetz (Growth Opportunities Act). This is a genuine cliff-edge, not a tax-free allowance that reduces everyone's bill: if your total gains for the year stay at or under the threshold, none of it is taxable, but exceed it by even a single euro and the entire gain becomes taxable, not just the amount above the threshold. It also applies across all your private sales for the year combined, not per transaction, so a smaller separate gain elsewhere in the same year counts toward the same limit.

If you've since moved abroad

Selling German property after relocating doesn't exempt you from these German rules, and your country of current residence may have its own tax claim on the same gain, depending on its domestic law and any double-taxation agreement with Germany. This is genuinely cross-border tax territory, working out which country taxes what, and whether a foreign tax credit applies, depends on your specific residency situation and isn't something to work out from general guidance alone.

Getting the timing and paperwork right

If you're anywhere close to either the ten-year mark or the edge of qualifying for the owner-occupier exemption, the exact dates matter enormously to the outcome, so confirm them against your notarized contracts rather than your memory of when you moved in or signed. For the other costs involved in a German property transaction, see our guides to closing costs when buying property in Germany and property transfer tax in Germany. And if some of the terms here were unfamiliar, our glossary of German mortgage and property terms covers the rest of the vocabulary you'll run into buying or selling property here.

As of September 2026. Tax rules and thresholds change, and this is not personalised tax advice. Confirm your specific situation, including exact qualifying dates and any cross-border tax questions, with a Steuerberater before relying on it.