Selling a flat: speculation period, owner-occupation and commercial property dealing

In Germany, gains from the sale of private property are only taxable within certain periods. This also applies to owners who live abroad. Anyone who buys and sells frequently, however, may be classed as a commercial property dealer.

The ten-year period

Under § 23(1) sentence 1 no. 1 of the Income Tax Act (EStG), the gain from the sale of a plot of land or a freehold flat held as private assets is taxable if no more than ten years pass between acquisition and sale. As a rule, the relevant dates are those of the notarial purchase contracts, not the entry in the land register.

After ten years have passed, the gain is in principle tax-free for private individuals – regardless of whether the flat was let.

Exception for owner-occupation

Within the period, the sale remains tax-free if the flat was used exclusively for the owner's own residential purposes either throughout the entire period between acquisition and sale or in the year of sale and the two preceding calendar years. A holiday flat that was let from time to time generally does not meet this requirement.

Whether a second home that is only occasionally used by the owner counts as "own residential purposes" (eigene Wohnzwecke) depends on the individual case – clarify this with a tax adviser before the sale.

How the gain is calculated

The gain is the sale price minus the acquisition costs and the selling costs (e.g. the seller's agent's commission). The acquisition costs are reduced by the depreciation claimed (§ 23(3) sentence 4 EStG). Anyone who has claimed depreciation for ten years and sells before the period expires will therefore, in effect, pay tax on these amounts retrospectively.

Gains from private sale transactions (private Veräußerungsgeschäfte) remain tax-free if the total gain in the calendar year is less than €1,000 (exemption limit, Freigrenze, § 23(3) sentence 5 EStG). If this limit is reached, the entire gain is taxable.

Owners resident abroad

Persons with limited tax liability also pay tax in Germany on private sale gains from German real property (§ 49(1) no. 8 EStG). The double taxation agreements generally allocate the right to tax gains from the sale of real property to the country in which it is located. Whether and how your country of residence additionally taxes the gain depends on the agreement and the law there.

Commercial property dealing

According to the view of the tax authorities (Federal Ministry of Finance circular of 26.03.2004), anyone who sells more than three properties within about five years of acquisition or construction is generally regarded as a commercial property dealer (gewerblicher Grundstückshandel). Gains are then subject to income tax and, where applicable, trade tax (Gewerbesteuer), regardless of the ten-year period.

The three-property limit (Drei-Objekt-Grenze) is an indication, not a rigid rule: the five-year period is not absolute, and properties sold only after five to ten years may also be included. Owner-occupied flats generally do not count. Anyone holding several flats should plan sales from a tax perspective in advance.

Selling a let flat

An existing tenancy agreement does not end with the sale: under § 566 BGB, the buyer assumes the landlord's rights and obligations ("sale does not break a lease", Kauf bricht nicht Miete). Prospective buyers therefore expect the tenancy agreement, evidence of rent increases and information on the deposit.

If the flat was converted into a freehold flat only after it had been let to the tenant, the tenant has a pre-emption right (Vorkaufsrecht) on the first sale to a third party (§ 577 BGB). The notary takes this into account in the contract; the tenant can declare within two months of being notified of the purchase contract whether they will buy on the same terms.

As a seller, you must also present the energy performance certificate (Energieausweis) to prospective buyers at the latest at the viewing and hand it over after the contract is concluded.

Sources

https://www.gesetze-im-internet.de/estg/__23.html
https://www.gesetze-im-internet.de/estg/__49.html
https://www.cpm-steuerberater.de/news/entry/2026/01/16/9545-grundstueckshandel-drei-objekt-grenze-steuerfallen-vermeiden
https://rechtsanwalt-griechenland.de/wp-content/uploads/2026/07/Doppelbesteuerungsabkommen_Deutschland_Griechenland.pdf
https://www.agenziaentrate.gov.it/portale/schede/pagamenti/imposta-sul-valore-degli-immobili-estero-ivie/base-imponibile-e-aliquota-scheda-ivie
https://sede.agenciatributaria.gob.es/Sede/todas-gestiones/impuestos-tasas/declaraciones-informativas/modelo-720-decla_____sobre-bienes-derechos-extranjero_/preguntas-frecuentes.html
https://taxdown.es/inversion-acciones-bolsa/modelo-720
https://www.gesetze-im-internet.de/bgb/__566.html
https://www.gesetze-im-internet.de/bgb/__577.html
https://www.buzer.de/80_GModG.htm

Frequently asked questions

Does the ten-year period also apply to foreigners?

Yes. Through § 49(1) no. 8 EStG, the rule in § 23 EStG also applies to owners without a place of residence in Germany.

When does the period start?

As a rule, from the date of the notarial purchase contract on acquisition until the date of the notarial purchase contract on sale.

Is tax payable on the sale of an inherited flat?

In the case of an inheritance, the heir takes over the deceased's acquisition date. Whether the period has expired must therefore be checked against the deceased's purchase date.

As a seller, do I have to ask the tenant first?

No. The tenant does not have to consent; the tenancy agreement passes to the buyer. The tenant has a pre-emption right only in the cases covered by § 577 BGB.

General information, as of October 2026. It does not replace advice from a tax adviser, a lawyer or a notary.