How much are additional property purchase costs?

Typically around 6.5–10% of the price, depending on state and commission. Transfer tax is currently 5.0% in Baden-Württemberg and Rheinland-Pfalz and 6.0% in Hessen; notary and land register add around 1.5–2.0% together. With no buyer’s commission, as at Loro, costs sit at the lower end. Please check current rates.

Can I deduct purchase costs immediately?

Only partly for rented property. Transfer tax, notary and land register purchase fees form acquisition costs: their building share increases the depreciation base and is deducted annually. Financing costs, such as creating a land charge, are immediately deductible rental expenses. Discuss specific allocations with your tax adviser.

Which costs disappear when buying through Loro?

Loro Real Estate charges no buyer’s estate agent commission: our selected investment properties in Rhein-Neckar and Hessen are commission-free for buyers. Transfer tax, notary and land register fees apply to every purchase and cannot be avoided. We transparently include the remaining costs so you can assess the total investment realistically.

Property Purchase Costs: Amounts & Tax Deductions

Q: What are acquisition-related construction costs?

If net repair and modernisation costs within three years of purchase exceed 15% of building acquisition costs, §6(1) no.1a EStG treats them as construction costs. They are no longer immediately deductible but take effect only through depreciation. If planning extensive work shortly after buying, watch the 15% threshold and coordinate with your tax adviser.

By Loro Real Estate team · Last updated: July 2026

The price is only part of buying a property. Purchase costs add transfer tax, notary, land register, possible commission and financing costs. They matter twice to investors: they significantly increase total investment and help determine tax treatment. This guide explains the items, typical amounts, deductions and why the 15% threshold for acquisition-related construction costs matters for buyers planning renovations.

Tax rates and rules can change. All figures reflect the position at publication; please check current rules and have a tax adviser assess your circumstances.

Property purchase costs: a breakdown

Four groups make up most additional costs. Not all apply to every purchase, making close examination of the specific offer essential.

Property transfer tax (Grunderwerbsteuer). The largest individual item: currently 5.0% of the price in Baden-Württemberg, 6.0% in Hessen and 5.0% in Rheinland-Pfalz. Our guide explains the regional impact: Property transfer tax in Baden-Württemberg and Hessen.
Notary (Notar) and land register (Grundbuch). Notarising the purchase agreement and registering ownership together cost around 1.5–2.0% of the price.
Estate agent commission. It applies only where a buyer’s commission is charged. Buying through Loro removes it; our investment properties are without commission.
financing costs. Financing buyers also pay, for example, to establish a land charge. Depending on the bank, other items such as commitment interest may apply. These relatively small costs still belong in a complete calculation.

Total purchase costs: typically around 6.5–10%

Together, the items typically total around 6.5–10% of the price. The range depends on the state and commission: without buyer’s commission it is at the lower end; with commission it moves towards the upper end.

Illustration: purchase costs in Baden-Württemberg

Purchase price: €300,000
Property transfer tax (5.0%): €15,000
Notary and land register (around 1.5–2.0%): €4,500–6,000
Buyer’s estate agent commission: none when buying through Loro

Total purchase costs: around 6.5–7.0% of the price, approximately €19,500–21,000. Total investment is therefore around €319,500–321,000, significantly above the price alone. This matters for financing, as many banks expect additional costs to be covered by equity.

By comparison, Hessen’s transfer tax alone is 6.0% at the same price, so total costs are higher. In Rheinland-Pfalz, relevant for example to investment properties in Ludwigshafen , the rate is 5.0%, as in Baden-Württemberg. Please check current tax rates before buying.

Deducting purchase costs: how it works for rented property

For investors who let the property, purchase costs are not lost for tax purposes. Correct allocation matters because the tax office treats items differently:

Acquisition costs such as transfer tax, purchase-agreement notary fees and land registration form part of acquisition costs. The building share increases the depreciation base; these costs take effect over annual depreciation rather than immediately. Our guide explains the detail: Property depreciation (AfA).
Financing costs , such as notary fees for establishing a land charge, are rental expenses deductible immediately in the year paid.

Splitting the price between building and land also matters: only the building share is depreciable. Agree the allocation of individual items with your tax adviser.

Acquisition-related construction costs: the 15% threshold with examples

If renovating soon after buying, know §6(1) no.1a EStG. If repair and modernisation costs, net of VAT, within three years exceed 15% of building acquisition costs, they count as acquisition-related construction costs. They are no longer immediately deductible; they increase the depreciation base and take effect over many years rather than at once.

Example 1: below the threshold

Building acquisition cost share: €240,000
15% threshold: €36,000 net within three years
Renovation costs: €30,000 net

Costs remain below the threshold and are generally immediately deductible.

Example 2: above the threshold

Building acquisition cost share: €240,000; threshold: €36,000 net
Renovation costs: €45,000 net

The threshold is exceeded. All expenditure is treated as construction costs and deducted only through depreciation; no immediate deduction applies.

Details matter in practice: which works count towards the threshold and how phased works are assessed depend on the case. If planning major renovation within three years of purchase, calculate it with your tax adviser in advance and check current rules.

Purchase costs in yield calculations

When assessing yield, additional purchase costs belong in the denominator of net rental yield:

Net rental yield (%) = ((annual net rent excluding service charges − non-recoverable operating costs) / (purchase price + purchase costs)) × 100

Omitting additional costs systematically overstates yield. With around 6.5–10% extra costs, the difference is substantial. Our interactive property investment calculator shows the effect on a property in seconds: enter price, purchase costs, rent and operating costs and see the change in net rental yield. This also helps compare properties: two apartments at the same price can have very different total investments if one carries buyer’s commission.

How Loro lowers additional purchase costs

Transfer tax, notary and land register fees are unavoidable; buyer’s commission is not. Buying through Loro Real Estate removes it entirely. In the example above, costs stay at around €19,500–21,000 rather than rising noticeably according to the commission rate.

Since 2018 we have supported private investors in Rhein-Neckar and Hessen with selected, assessed properties, off-market access and, on request, financing brokerage through partner banks. If you would like to buy a tenanted apartment, we transparently calculate the full investment and all additional costs with you, including risks such as rent default, interest changes and value fluctuations. Arrange a non-binding initial consultation.

This article is for information only and does not constitute investment, tax or legal advice.

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Additional property purchase costs: what investors should budget for