After Germany’s real estate market experienced significant declines in 2022–2023 (20–30% in some areas), the market gradually stabilized in 2024–2026. For foreign nationals with long-term plans in Germany, both owner-occupied home purchases and investment properties are options worth serious consideration. This article answers core questions from a foreign resident’s perspective.
Can Foreign Nationals Buy Property in Germany?
Answer: Absolutely. Germany has no specific restrictions on foreign nationals purchasing property — regardless of nationality, whether a legal German resident (holding a residence permit) or a non-resident (purchasing investment property from abroad), anyone can buy German real estate with full ownership rights.
But mortgage approval is a more complex matter: German banks assessing mortgage (Hypothek) applications typically require: a permanent employment contract in Germany (residence permit type not specified, but stable income required); down payment (Eigenkapital) of at least 20%, ideally 30%+; good SCHUFA credit record (established after 1–2 years in Germany). People who have been in Germany for under 2 years without a German credit history generally find it difficult to obtain a traditional bank mortgage.
Reference Net Rental Yields in Major German Cities (2025 Data)
Berlin: Average purchase price €5,000–7,000/sqm; monthly rent €15–20/sqm; net rental yield approximately 2.5–3.5% (after management fees, maintenance, vacancies). Munich: Purchase price €8,000–12,000/sqm; monthly rent €18–25/sqm; net yield approximately 2–2.5% (lower, because prices are higher). Second-tier cities like Leipzig and Nuremberg: yields can reach 4–5%, prices are lower but capital appreciation expectations are also lower. Complete German real estate investment analysis.
Property Purchase-Related Taxes and Fees
Land transfer tax (Grunderwerbsteuer): 3.5–6.5% depending on the state. Agent commission (Maklergebühl): typically 3–3.5% (shared equally between buyer and seller). Notary fee (Notargebühr): approximately 1.5–2%. Total additional purchase costs approximately 8–12% — must be included in total cost calculations.
Holding and Selling Taxes
While holding: rental income from non-owner-occupied property is taxed at personal income tax rates; deductible: depreciation (2% of building value annually), loan interest, maintenance costs. On sale: selling after holding for 10+ years, capital gains are completely tax-free (similar long-hold exemption to cryptocurrency). Selling within 10 years, gains are taxed at personal income tax rates. Therefore, German real estate is a classic long-term investment target.
