German Capital Gains Tax on Property: The 10-Year Rule
Anyone who sells a rented-out property in Germany at a profit may owe Spekulationssteuer – more precisely, income tax on a private disposal transaction (Privates Veräußerungsgeschäft, § 23 EStG). Whether and how much depends mainly on two things: the holding period and whether you lived in the property yourself. This guide explains the rule, the exceptions, and how the taxable gain is calculated.
What is "Spekulationssteuer"?
"Spekulationssteuer" (literally "speculation tax") is colloquial – the law calls it a private disposal transaction (§ 23 EStG). If you sell a property at a profit within a certain period after buying it, that profit is added to your other taxable income and taxed at your personal income tax rate – not at a flat rate like the capital-gains tax on stock-market gains.
The 10-year holding period
For land and real property, the period between acquisition and disposal is ten years. What counts is not the land-registry entry or the handover date, but the dates of the notarized contracts – i.e. the date of the purchase contract when you bought and the date of the sale contract when you sell. If more than ten years lie between the two, the gain is tax-free.
Inherited or gifted: the clock keeps running
For an unpaid acquisition – i.e. inheritance or gift – the period does not restart. The successor takes over the original acquisition date of their predecessor. So if you sell an inherited property, you need to check when the deceased originally bought it.
The main exception: owner-occupation
Regardless of the 10-year period, a sale stays tax-free if the property was used for your own residential purposes. The law recognizes two variants:
- The property was used by you continuously in the year of sale and the two preceding calendar years, or
- it was used by you in the year of sale and the year before – here a single continuous period spanning the three calendar years is enough, even if it is shorter than 24 months.
In practice this exception mainly covers owner-occupied apartments and houses – it does not apply to a property that was let out the whole time. If a property was only partly owner-occupied (e.g. a granny flat that was rented out), usually only the rented-out share is taxable.
How is the taxable gain calculated?
The taxable gain is not simply the sale price minus the purchase price. The formula accounts for incidental costs and depreciation already claimed:
| Item | Effect |
|---|---|
| Sale price | Sale price minus selling costs (e.g. agent's fee) |
| − Acquisition cost | Purchase price plus buying costs (notary, real-estate transfer tax, agent's fee at purchase) |
| − Subsequent production cost | Major renovations/extensions during the holding period |
| + Depreciation claimed | Amounts written off during the letting period are added back to the taxable gain |
The last point surprises many sellers: the depreciation (AfA) that reduced the property's book value in the Anlage V over the letting years is added back to the gain on a sale that falls within the period (§ 23 Abs. 3 Satz 4 EStG). Anyone who has depreciated the property for years effectively pays back that tax benefit, pro rata, if the sale triggers the rule.
Exemption threshold for small gains
If the total gain from all private disposal transactions in a calendar year stays below the statutory exemption threshold, it remains entirely tax-free – but once it exceeds the threshold, the entire gain becomes taxable, not just the part above it. This is a cliff-edge threshold (Freigrenze), not a tax-free allowance (Freibetrag).
Offsetting losses
If you sell at a loss, it cannot be offset against other types of income (e.g. salary or rental income from other properties). It can only be offset against gains from other private disposal transactions in the same year or – within the loss carry-back/carry-forward rules – neighboring years.
Keep the sale date and tax impact in view
RenoDiary brings together purchase date, acquisition cost and the depreciation recorded in Anlage V per property – so you always know where you stand on the 10-year rule and the tax consequences of a sale.
Try it for freeFAQ
Does the notary date or the land-registry entry count?
What matters is the date the notarized purchase and sale contracts were signed – not the later land-registry entry (Auflassung) or the handover of the property.
Does the rule also apply to let commercial property?
Yes, the 10-year holding period generally applies to all land and property-like rights, regardless of how they are used. The owner-occupier exception, however, only applies to residential use.
Do I have to declare the sale even if it is tax-free?
A sale that falls outside the period or under the owner-occupier exception generally does not need to be declared as a private disposal transaction. When in doubt, it is worth consulting an authorized tax professional, especially in more complex cases such as partial sales or mixed use.
This article provides general orientation and does not replace individual tax advice within the meaning of § 3 StBerG. Whether capital gains tax applies in a specific case depends on numerous details – seek advice from an authorized professional before selling.