GERMANY REAL ESTATE PROPERTIES
German Real Estate Market
After more than four years of strong house price rises, Germany's housing market remains very strong. In a country where the housing market has historically been extraordinarily stable, this is a significant shift.
The reasons? decade-long economic growth, more than 1 million refugees, high work-related immigration, record-low unemployment, weak construction supply and low interest rates.
The German hedonic price index rose by 9.01% (7.6% inflation-adjusted) in May 2019 from a year earlier (hedonic indices attempt to compare like-for-like exactly, so are the best measure of house price trends), based on Eurospace figures. It was the highest growth since December 2016.
Roundtrip transaction costs are low to moderate at around 9.02% to 16.34% of the total price. Real estate transfer tax is levied at 3.5% to 6.5%, depending on the federal state where the property is located. Real estate agent's fee is negotiable from 3% to 6%, plus 19% VAT.
International Real Estate Investment in Germany
A foreigner can legally buy and operate real estate in Germany, which, for many years, has always been a real estate option for an investor who wants to diversify his portfolio and enjoy a favourable economic trend.
The real estate market in Germany is favourable for transactions and investments for several reasons:
- A transparent and open system.
- The law is in favour of the owners and protects them.
- A foreigner can become owner in Germany.
- Taxation is favourable.
Our team of experts in Germany are always ready to help you facilitate the process from your home country (visa, opening of bank account, buying your own real estate properties, etc.)
The EU and the United States signed an agreement, allowing to avoid the double taxation.
Before Purchasing a Property
In order to have a clear definition of your project and meet your goal, it is necessary to process as follow:
1. DEFINITION OF YOUR OBJECTIVES
Before any process or research, it is necessary to define tangible objectives for your future investment: a rental profitability or an appreciation of your property, etc. We help on market specifics.
After Defining your budget, our team in Croatia will make available all the best properties that meet budget and your goal.
3. INVESTMENT STRUCTURE
Registration of your company within 72 hrs. until ID Tax number id provided by the Croatian tax authorities.
4. BANK ACCOUNT
Following the creation of your company, the next most important step is to open a bank account for all the transactions related to your investment: rent payments, property tax payments, etc. The opening of your account can be carried out remotely by our Croatian team on presentation of your credentials and registration of your company in Croatia. You will have access to an online bank and will be the sole owner and manager of your account.
Purchasing a Property
Besides the definition of your project and the creation of your company, our German Team will support you in the research, negotiation and acquisition of your real estate property.
1. PROPERTY RESEARCH
Introductory market study will help outline your research and target opportunities on properties for sale, new or pre-construction. Click below to see our listing.
2. VISIT OF PROPERTY
Our Team will also help you to schedule your stay in Miami in accommodation, travel, property showings, etc. Then, you select the most appropriate property before drafting an offer.
3. OFFER AND DRAFT PURCHASE CONTRACT
After final acceptance, the Purchase Agreement is written according to the rules and laws of Germany and the European Union. A deposit of 10% of the amount is required at the signing of the contract. It will be blocked on the Escrow Account of the Title Company in charge of necessary investigations. 4. SIGNATURE AND “CLOSING DISCLOSURE”
After due process, Contract is signed and the balance and other fees shall be paid. Agency and Notary Fees: 1.5-5% of the amount
Our German Agents and Representatives are always here to assist our prospective international investors to meet their needs. We give our clients a full representation and bring them all the tools needed to realize their real estate investment safely.When investing in Germany, our priority is to make sure that this investment is protected as well as the investors under the Laws of Germany and the European Union. Having a legal structure in place will be beneficial in many ways: 1) Better Tax Optimization, 2) Privacy and 3) Liability.
GERMANY IN NUMBERS
FREQUENTLY ASKED QUESTIONS
Who can buy a property in Germany?
Citizens of EU Member States - from 01. February.2009.
For citizens or legal persons who are not members of the European Union, the rule of reciprocity applies - if Croatian citizens can buy in that country, then the citizens of those countries can buy in Croatia. Here are some countries that have reciprocity, for the full list or additional questions contact us:
- Bosna and Hercegovina
- New Zeland
- South Africa Republic
- South Korea
Non EU citizens
The citizens of other countries, outside the EU, if they are a resident of the country that has a reciprocity agreement with Croatia, they are eligible to acquire real estate here with the approval of the Ministry of Foreign Affairs. List of countries with reciprocity agreement with Croatia expands constantly so best way is to check with us for latest information. Further, foreigners are prohibited from buying forest or agricultural land or any property which comes under the ambit of cultural monument. The faster way can be founding a company (SPV) in Croatia which then buys the real estate.
Costs and fees?
Real Estate Agent´s Fee 3% + PDV (tax) =3.75% - Paid by buyer
Real estate transfer tax: 3% - Paid by buyer
- In a situation where the company buys real estate, which is built and solely registered on the company, there is no transfer tax (company buys a company). Example – Foreign company buying hotel business or villa built with the intention for sale, for which purposes the company is made and/or operating.
- If the building is newly built, under Two (2) years, then there is no transfer tax, and the VAT is included in the price. Lawyer fee – 0% – We have the lawyer in our team.
Permission from the Ministry of Justice (for non-EU citizens), the Notary's Office fee and that of the translator and the fee charged by the Land Registrar – total up to EUR 500.
Purchase and acquisition process?
1) Estate Pre-contract agreement can be made if the buyer and seller agree on it, but if not, they can go straight to signing the main contract. However, if a pre-contract is signed, the buyer is expected to make a down payment of 10%-15% of the property price. The pre-contract contains all necessary terms and conditions as the main contact. Therfore, by signing it it becomes fully binding and the property is reserved for the buyer for the agreed time period, whitin which all the agreed terms and conditions provided in point 2) below shall be resolved and met. After that, the main contract can be signed.
2) The buyer then should apply for the consent from the Croatian Ministry of Foreign Affairs. Necessary documents include:
- The purchase agreement
- The proof of ownership (seller)
- Confirmation that the property is within the construction zone envisaged by the zoning plan
- Proof of citizenship – buyer
- Proof of citizenship – seller
3) The contract is then prepared by a lawyer for the parties to sign, deal and notaorised by a Croatian notary office. An official note of the contract should be made in the Land Registry. Once the Ministry of foreign affairs consent is granted, the contract needs to be registered in the Municipal Cadastral Department´s Land Books, and the purchase tax needs to be paid.
Is it possible to skip the pre-contract?
What is the Notary Office?
What is an escrow service?
How to open a Bank Account in Croatia?
For opening a bank account in Croatia, you will need your passport to prove your identity and OIB number that every person in Croatia must have (Personal identity tax number), which your solicitor process for you at local Tax Administration Office. Maybe the best way is that you open a banka account (EUR curremcy, which is Croatian national currncy) to locally handle the transfer of payments for the property transaction, which you will need for your local operations expenses once the transaction has completed. Payment shall be made in EUR currency.
There are two levels for profit tax that companies pay:
- 12%, if profit in the tax period (year) are up to €1,000,000.00.
- 18%, if profit in the tax period (year) are above €1,000,000.
Why invest in Croatia?
Croatia is a country in the European Union with sustainable economic development, a worldwide well-known tourist destination. It is becoming more and more popular. Because it is still developing towards its full potential there is a lot of space on the market for providing a new and innovative service in the hospitality sector. It has an affordable, talented and multilingual workforce, half of the population speaks English.
Tourism accounts for 12.5% of Croatia's GDP. Croatia achieved record results in revenue from foreign tourists in 2022, of €13.1 billion, and if we were to add to that the estimated revenue from domestic tourists, we would arrive at a total of about €15 billion. In 2020, €7 billion was invested in the construction and renovation of commercial and residential properties, campsites, nautical tourism harbors, and theme parks, etc. Therefore, all these investments and business development make Croatia a great potential for investments.
Croatia is a traditional Mediterranean destination and because of its geographic proximity is very attractive to major emissive markets like Germany, Italy, Austria, Slovenia, Hungary, and other states in Central and Southeast Europe.
Croatia is full of natural beauties and untouched nature. There are 8 national parks and 11 nature parks giving the total of 10% of the protected area, over thousands of years many old towns and maritime ports have been built along the coast and on the many islands.
To visit Croatia means to become part of its landscape of natural wonders. Its national parks may be the country's best-known conservation areas. It's like an open-air museum conceived by Mother Nature. Croatia has been blessed with some astonishing pieces of nature.
DATA OF GERMAN TOURISM
Analysis of German tourism - 2022
We drive your investment leads and add value to your wealth. For us, your property means your wealth. Get the best solutions on mdaglobalrealestate.com platform, stimulating your business economic growth. Croatia is a great investment destination.