Key Facts at a Glance
- Notary fees for purchasing real estate typically range from approximately 0.6% to 1.5% of the purchase price.
- Notary fees are prescribed by law and are the same for every notary.
- The exact amount of the fees depends on how the transaction is structured (e.g. whether a land charge is created or the purchase is handled via a notary escrow account, etc.).
What are the notary fees when purchasing real estate?
Notary fees typically amount to approximately 0.6% to 1.5% of the purchase price. They are prescribed by law and are calculated based on the purchase price. Notaries are not permitted to deviate from the statutory fee schedule, which means that notary fees are the same regardless of which notary is engaged.
Notary costs are composed of the individual services provided by the notary during the purchase process. Notary fees are incurred for the following activities:
- Notarisation of the purchase agreement: Notarial certification is required to conclude a legally valid real estate purchase agreement.
- Execution and administration: The notary oversees the transaction and ensures the proper execution of the contract. In particular, the notary handles the registration in the land register. In addition, the notary typically provides a draft purchase agreement, saving both buyer and seller the effort of preparing one themselves.
- VAT: Value-added tax is charged on the notary’s services.
- Expenses: The notary’s out-of-pocket expenses (e.g. land register extracts, postage, etc.) are also reimbursed.
In the course of a real estate purchase, there are additional notarial services for which fees may be incurred. This is particularly the case in the following situations:
- Notary escrow account: In exceptional cases, the transaction may be handled via a notary escrow account. This means that the buyer transfers the purchase price to the notary’s escrow account. Once certain conditions defined in the purchase agreement are met, the notary releases the funds to the seller.
- Land charge: If the buyer takes out a loan to finance the purchase, the lending bank will typically require a land charge as security. This usually involves the notarisation of the land charge and its registration in the land register.
Can notary fees be deducted for tax purposes?
Whether notary fees can be deducted for tax purposes depends on the individual case. A key factor is whether the property is intended to generate income, for example through rental. In such cases, notary fees can generally be treated as acquisition costs. In the case of private use, tax deductibility is only possible in exceptional circumstances. The specific details should be discussed with a tax advisor.
Who bears the notary fees when purchasing real estate?
As a general rule, the buyer bears the notary fees when purchasing a property. This also corresponds to the statutory default rule under Section 448 (2) of the German Civil Code (BGB). However, different arrangements may be agreed upon. For example, the parties may agree that the seller bears the costs or that buyer and seller share the costs equally.
What additional costs are incurred when purchasing real estate?
Notary fees represent only a small portion of the total costs of purchasing a property. In addition to notary fees, the following costs typically arise:
- Real estate agent: If the property is acquired through a real estate agent, commission fees of approximately 7% of the purchase price may apply. In most cases, the buyer and seller share these costs, meaning each party typically pays around 3.5% of the purchase price.
- Land registry: Fees are charged for registering the change of ownership in the land register and for recording a priority notice. These fees typically amount to approximately 0.5% of the purchase price.
- Real estate transfer tax: The purchase of real estate is subject to transfer tax. In Germany, this tax ranges between 3.5% and 6.5% of the purchase price, depending on the federal state. As a general rule, the buyer is responsible for paying this tax.
