If you are thinking of selling a property in Berlin, then there are several things you will need to consider and steps that need to be completed before the transaction is finalized. You also will need to go through:
- Checking the tax implications in Germany of selling your property
- Getting the property documentation ready
- Determining the optimal selling price
- Getting your Berlin Property ready for sale
- Finding the right buyer and complete the sale process
Check Tax Implications of Selling Real Estate in Germany
It is wise to consider the tax implications of selling a property in Berlin before starting the sale process. Depending on your ownership type and your situation in Germany, you might have to pay (or not) three different taxes:
- Spekulationssteuer: a private seler may need to pay this tax if he sells a property where he not currently live in or have not lived in it over the course of the last three years.
- Gewerbesteuer and Körperschaftsteuer: if you have bought and sold more than three properties in Germany in the last five years, then you might be considered as a company that trades properties and you may need to pay those corporate taxes.
- Umsatzsteuer: must be paid if you are buying and selling properties as a commercial activity (i.e property development)
However, if you are selling, as a private owner, an investment property that you owned for more than 10 years then you would be able to sell it 100% tax free.
So before deciding to sell your property in Berlin, check the situation with your tax advisor or with your estate agent in Berlin because the tax rate on your capital gains can exceed 40 percent in some circumstances! In view of that, you can decide whether to go ahead with selling your apartment in Berlin or wait some years for a potential tax relief.
Get Your Property Documents Ready
Before starting sale process, it is important to get your property documentation ready. You need several documents to sell your Berlin property. You will need essentially:
- Layout plan- called Grundriss in German: this document shows the exact measurements of your property.
- Certified Abstract from the Land Register: called Grundbuchauszug in Germany, this is the official property deed from the city.
- Declaration of Division: called Teilungserklärung in Germany, this document shows the location of the property in relation to adjoining properties.
- Monthly HOA or condo fees: called Wirtschafstplan in Germany, this document enumerates the details of the expenses of the building and your share of each expense
- Minutes of owners’ meetings of last 3 years
There are also many other documents that may be beneficial that could help the buyer to have a clear idea on the apartment and the building situation. Most of these documents pertain to flat owners who are ready to sell their Berlin property. Some real estate agencies offer to collect the documentation on your behalf which makes things much easier as many property-and building managers in Germany do not speak English.
Determine the Optimal Selling Price
With the price increase during last 5 years, you are likely to earn more by selling your house or apartment than you paid for it.
The first thing you need to know is that Berlin is one of the hottest seller’s markets in the world when it comes to vacant apartments. The need for housing far exceeds the available housing market offer. In fact, more than 98% are tenanted so when it comes to selling a vacant apartment, the demand would be quite high for well-priced flats.
If your property is tenanted, then it will be less demanded and less liquid and the selling period could be twice longer, always depending on the offering price. Generally, tenanted flats are sold at a discount compared to vacant ones. The selling price discount would essentially depend on the type of rental contract and the rent level and could represent up to 40%!
You need to determine the asking price before you put your home for sale on the market. You could ask a real estate agent or surveyor to visit the property in order to provide you with an accurate appraisal of your property value in Berlin.
If you choose a surveyor, they are available through several different organizations including the Chamber of Architects or DEKRA. Many, take the value paid for the home, the land value and add the cost of supplies and time that they put into renovation in the apartment and in the apartment complex (i.e changes in common areas, staircase renovation….) that might increase or decrease the value of your investment.
The second way to determine the value of your property to have a professional property valuation in Berlin by an established real estate agent. Getting a valuation from a real estate agency provides the advantage getting a market-oriented assessment that takes into account with latest price developments, regulation knowledge, local area demand, comparable recent sales,…
Get your Berlin Property Ready for Sale!
You can often sell your property without making important renovations as the housing demand is quite high. However, doing minor repairs and sprucing up your property would definitely help on getting a better sale price and selling your property within a shorter period. This further step will of course depend on whether you have the time and the budget for the improvements before taking the property to the market. This would be certainly a point to discuss with your real estate agent, as some agents in Berlin offer assistance on renovation works and home-staging.
Find the right Buyer and complete the Property Selling process in Berlin!
Successfully selling a property in Berlin is quite different compared to many real estate markets because Berlin is a very open and international city. So you would have quite different people interested in your property: Berliners, people from other regions of Germany, expatriates and international investors so it makes sense to work with an agent who has an international outreach to maximize your chances for selling your apartment at the best price.
One of the other reasons that you should work with a professional real estate agent is that buyers must be found and vetted, especially if the buyer needs a mortgage. Once the buyer mortgage is approved, then comes the notarization process in Germany which would take some weeks to organize. Then, documents must be notarized before the sale is officially completed.
A trusted international real estate agent in Berlin like First Citiz Berlin would take care of all the selling process steps in Germany and manage all transaction details, leaving you to concentrate on other important matters.