Anyone who sells a property at a profit within the ten-year speculation period must pay tax on this profit – but not on the full sale proceeds. Numerous expenses related to the sale reduce the taxable profit and therefore the tax burden. We show you which costs the tax office recognizes, how you can claim the early repayment penalty, and why a commission-free sale often leaves you with more net proceeds in the end despite the lack of broker costs.
When does speculation tax apply to a property sale at all?
The so-called speculation tax is not a separate type of tax, but rather the normal income tax on a profit from a private disposal transaction pursuant to Section 23 of the German Income Tax Act (EStG). It applies if no more than ten years lie between the purchase and sale of a property.
The sale is tax-free primarily in two cases:
- Owner-occupation: If you occupied the property exclusively yourself in the year of sale and the two preceding years – or continuously since acquisition – no speculation tax is due.
- Expiry of the period: After the ten-year speculation period has expired, the profit is generally tax-free, regardless of its amount.
If the total profit from private disposal transactions in a calendar year remains below the tax-free threshold of 1,000 euros (since 2024, previously 600 euros), it is also tax-free. If this threshold is exceeded, the entire profit is taxable – at your personal income tax rate, which can range between 14 and 45 percent. This is precisely why it pays to know every deductible cost item.
How the tax office calculates the taxable profit
It is not the sale price that is taxed, but the profit. Pursuant to Section 23 para. 3 EStG, this is the difference between the disposal price on the one hand and the acquisition or production costs as well as income-related expenses on the other. In simplified terms:
Disposal price − acquisition costs − deductible costs = taxable profit
You should be aware of two special features:
- Ancillary acquisition costs are included: The costs you incurred when you originally purchased the property – real estate transfer tax, notary fees and land registry fees – increase the acquisition costs and thus reduce the profit.
- Depreciation is added back: In the case of a rented property, depreciation reduces the depreciation (AfA) claimed over the years reduces the acquisition costs. The AfA used therefore mathematically increases the capital gain – because it has already reduced your tax burden during the rental period.
These costs reduce your taxable gain
All expenses incurred as a result of the sale – the so-called selling costs – as well as subsequent value-enhancing investments are deductible. These include in particular:
- Seller’s share of the broker’s commission: If you appoint a broker, your share of the commission is deductible. Since December 2020, buyers and sellers generally share the commission equally when selling apartments and single-family homes to consumers.
- Marketing costs: Expenses for listings, sales advertisements, professional photographs, a valuation report for determining the price and the energy performance certificate.
- Notary and land registry costs for deletion: If the buyer requires the property to be transferred free of encumbrances, notary and land registry fees arise for deleting registered land charges. These are borne by the seller – and can be deducted.
- Early repayment penalty: If you repay an existing loan early as part of the sale, the compensation paid to the bank is deductible (more on this below).
- Tax advisory costs for determining the capital gain.
- Travel and telephone costs demonstrably related to the sale.
- Subsequent production costs: Value-enhancing modernizations and extensions increase the acquisition or production costs and thus also reduce the gain.
However, costs borne by the buyer are not deductible – such as the notary and land registry fees for notarizing the purchase agreement and transferring ownership, as well as the buyer’s real estate transfer tax.
Early repayment penalty: the often-overlooked deduction
Anyone who sells their property before the end of the fixed-interest period and repays the loan early will usually pay the bank an early repayment penalty. For a rented property, the Federal Fiscal Court ruled that this compensation no longer constitutes income-related expenses from rental and leasing (BFH, judgment of February 11, 2014, IX R 42/13). The economic connection is no longer with the previous rental activity, but with the sale.
For sellers within the speculation period, this is not a disadvantage: If the sale is taxable under § 23 EStG, the early repayment penalty is considered asDisposal costs and directly reduces the taxable profit. Ongoing interest on debt incurred from the decision to sell can also be taken into account as income-related expenses under Section 9 of the Income Tax Act.
Sell without commission: no estate agent costs – but more net profit
At first glance, it sounds paradoxical: Anyone who sells without an estate agent has no estate agent commission to deduct from their taxes. The taxable profit is therefore higher by exactly this amount. Does foregoing an estate agent actually pay off?
Yes – significantly so. A deductible expense never saves you the full amount, but only your tax rate applied to it. For example: If your seller’s share of the commission were 12,000 euros and your marginal tax rate were 42 percent, this deduction would reduce your tax by around 5,040 euros. But you would have paid the full 12,000 euros – resulting in a net loss of almost 7,000 euros.
If, on the other hand, you sell without commission, you save the full 12,000 euros. Although you pay tax on this portion of the profit (i.e. around 5,040 euros more tax), the remaining approximately 7,000 euros stay in your pocket. All other selling costs – listings, appraisals, deletion costs, early repayment compensation – naturally remain deductible when selling privately. Through TraumImmo, you can reach potential buyers directly and without commission.
Example calculation: How the costs affect the result
Assume that you sell a rented condominium after eight years:
- Sale price: 400,000 euros
- Acquisition costs including ancillary costs: 300,000 euros
- Depreciation claimed: 30,000 euros
- Marketing, appraisal, deletion of the land charge: 4,000 euros
- Early repayment compensation: 8,000 euros
The taxable profit is calculated as follows: 400,000 − (300,000 − 30,000) − 4,000 − 8,000 = 118,000 euros. Without including the selling costs and early repayment compensation, the profit would be 12,000 euros higher. With a marginal tax rate of 42 percent, the deducted costs therefore save around 5,040 euros in taxes here.
FAQ on capital gains tax and deductible costs
Which costs can I deduct from capital gains tax?
All costs incurred as a result of the sale are deductible: the seller’s share of the estate agent commission, marketing and appraisal costs, notary and land registry fees for deleting land charges, the early repayment compensation, as well as Tax consultancy, travel and telephone costs. In addition, the original ancillary acquisition costs and value-enhancing modernizations reduce the profit.
Is the early repayment penalty deductible?
Yes, if the sale is taxable because it takes place within the speculation period. In that case, the early repayment penalty counts as a disposal cost and reduces the taxable profit. This benefit does not apply to a tax-free sale.
Can I deduct estate agent fees if I sell without an estate agent?
No. If no commission is incurred, there is nothing to deduct. However, this is not a disadvantage: You save the entire commission, whereas a deduction only gives you back a fraction—namely your tax rate. Selling commission-free therefore leaves you with more net profit overall.
How high is the exemption threshold?
Since 2024, profits from private disposal transactions of up to an exemption threshold of 1,000 euros per calendar year remain tax-free (previously 600 euros). If the threshold is exceeded, the entire profit is taxable.
Do I have to pay speculation tax if I lived in the property myself?
No. If you used the property continuously yourself or used it in the year of sale and the two preceding years, the sale is tax-free—in that case, deductible costs no longer matter.
Conclusion: Document costs carefully
If a property sale is taxable, accurately recording all selling costs determines the amount of tax. From the early repayment penalty and cancellation and expert appraisal costs to the original ancillary acquisition costs, every receipt reduces the profit. Those who sell commission-free forgo the deduction of estate agent fees, but retain the entire commission—and therefore the larger share. Keep all invoices safely and, if in doubt, consult a tax advisor to calculate the profit correctly.