Investing in Real Estate Abroad While Living in Germany

Published on January 17, 2026 and written by Cyril Jarnias

Moving to Germany often changes how one thinks about housing and wealth. In a country where long-term renting is the norm and less than half of residents are homeowners, expatriates quickly face the question: should one buy, where, how, under which legal and tax framework, and what are the specificities compared to France or other countries?

Understanding the Real Estate Market in Germany

Germany is the leading economic power in the European Union and one of the most stable economies in the world. This strength is reflected in its real estate market: overall, prices evolve slowly but steadily, with high data transparency and a very protective legal framework.

Unlike France, where homeownership is the majority, German culture is deeply rental-oriented. Only about 40 to 49% of households are homeowners, while the rate exceeds 60% in France. In major cities like Berlin, the share of renters even exceeds 80%, and the homeownership rate falls to around 15%. For an investor, this means two things: structurally high rental demand, but also very protective tenant rights and rather moderate yields.

A Chronic Housing Shortage

One of the essential drivers of the German market, especially for an expatriate looking to invest, remains the imbalance between supply and demand. In major cities, vacancy rates are often below 1%, the population is growing (notably through immigration), and new construction cannot keep up. The government had set a target of 400,000 new homes per year; recently, only about 250,000 were built, while over 320,000 are needed annually until 2030.

Stability, Transparency, and Legal Protection

For a foreign investor, Germany ticks several important boxes: legal security, price transparency, no restrictions for non-residents, and no wealth tax. Real estate law is very detailed, transactions are systematically handled by a notary and recorded in the land register (Grundbuch). The notary is neutral and verifies the legality of the transaction, although, a crucial point, they do not defend your interests like a “family” notary might in France; their role is to ensure compliance with the law, not to negotiate for you.

Finally, the tax argument is far from trivial: full exemption from capital gains tax on a resale after ten years of ownership (for an individual), low property taxes, and no local occupancy tax (taxe d’habitation). For an expatriate investor, the overall environment is rather attractive, provided one masters its codes.

Where to Invest When Living in Germany?

The first structuring decision is to choose the city, then the type of neighborhood. Germany is a very polycentric country: several metropolitan areas have their own market, their own economic structure, and their own price dynamics.

Overview of Major Cities

The table below allows for a quick comparison of some of the main destinations cited in recent studies.

City	Average Price per m² (Center)	Estimated Gross Rental Yield	Market Profile
Berlin	5,500 – 7,000 €	3 – 4.5 %	Growth, strong rental demand
Munich	8,500 – 11,500 €	2.5 – 3.5 %	Premium market, very expensive
Frankfurt	6,500 – 8,500 €	3 – 4.5 %	Financial hub, expatriates
Hamburg	5,500 – 7,500 €	3 – 4 %	Port, families, stability
Leipzig	2,500 – 4,000 €	4 – 5.5 %	Higher yields, emerging market

Price ranges are indicative and vary significantly depending on the neighborhood, the condition of the property (Altbau or Neubau), and the quality of the homeowners’ association.

Berlin, the Great Capital Still Undervalued

For an expatriate, Berlin is often the logical starting point: an international city, a strong foreign community, common use of English, an extremely dynamic rental market. Average prices per square meter remain lower than in Paris, Munich, or Frankfurt, while having tripled in a decade.

For an expatriate investor, Berlin offers an interesting compromise between long-term appreciation potential and near-guaranteed rental demand, particularly in certain neighborhoods:

Berlin Neighborhood	Rental and Investment Profile
Mitte	Hyper-center, international clientele, more oriented towards appreciation than immediate yield
Friedrichshain‑Kreuzberg	Young, creative, very high demand, low vacancy, good rental yield
Neukölln (north)	Up-and-coming neighborhood, still affordable, popular with students and freelancers
Charlottenburg‑Wilmersdorf	“Classic” residential, families and French-speaking expatriates, stable market
Lichtenberg / Alt‑Hohenschönhausen	Eastern neighborhoods, still catching up, suitable for “volume” investors

Add to this that more than 80% of the city’s inhabitants are tenants and the occupancy rate exceeds 98%, and one understands why the capital remains a prime target for expatriate buyers.

Munich, the Expensive Safe Haven

Munich exemplifies the German premium market: a very wealthy city, low unemployment, strong industrial (BMW, Siemens, Audi) and digital presence. Real estate prices are the highest in the country, with averages exceeding €10,000 per square meter downtown. For an expatriate, this means that a purchase in Munich is more of a capital preservation strategy than a yield play.

Frankfurt, Hamburg, Leipzig, and Others

Frankfurt concentrates banks, corporate headquarters, and European institutions. Demand for housing for executives and expatriates is strong there, leading to high but regular rents. Hamburg, a major port city, attracts more families and tertiary sector professionals, with a stable and relatively expensive residential market.

At the other end of the spectrum, Leipzig or Dresden still offer low prices for a European major city and above-average yields, often beyond 4%. The flip side: lower liquidity (sometimes longer resale times) and an economic fabric still catching up compared to major western metropolises.

For an expatriate, the real question is therefore less “which city is the best?” than “which risk/return profile, which strategy (primary residence or pure rental investment) and which holding period” one is targeting.

Can Foreigners Buy Property in Germany?

One of Germany’s attractive peculiarities is the absence of purchase restrictions for foreigners, whether European or not. There are no quotas, no residency requirements, nor any particular visa requirement to become a homeowner.

Concretely, an expatriate can buy:

– in their own name;

– with others (even without familial ties) in joint ownership;

– via a company or a structure like an SCI or GmbH.

Another important legal point: by default, German law applies to the transaction. It is theoretically possible to choose another law (for example, French law) if the seller consents, but this often increases notary fees and complicates the procedure; in practice, the vast majority of sales are concluded under German law.

How Does Buying a Property in Germany Work?

Even for an expatriate already living there, the acquisition process differs significantly from French practices. It is entirely governed by the law of the country where the property is located: in Germany, everything happens in German, with a German notary, with a specific contract structure and timelines.

The Main Steps

The typical process looks like this:

1. Definition of the total budget (purchase price + ancillary costs + potential renovation costs) 2. Pre-approval for financing from a bank 3. Property search (portals, agencies, private sales) 4. Viewings and, if necessary, a technical inspection (Gutachter) 5. Purchase offer and possible reservation of the property 6. Drafting of the deed by the notary 7. Signing of the purchase contract (Kaufvertrag) 8. Payment of the price, payment of the real estate transfer tax 9. Registration in the land register (Grundbuch) and handover of keys

The Financing Phase: A Key Point for Expatriates

In Germany, purchase contracts generally do not include a financing contingency clause. If you sign and the bank withdraws, you remain obligated to buy, unless a specific clause has been expressly negotiated and accepted by the seller and the notary. This is why advice converges: one must secure financing before making a firm offer.

– obtaining a pre-approval (Finanzierungsbestätigung) before committing;

– checking one’s “Bonität”, i.e., SCHUFA credit score;

– preparing proof of income, residence, and savings well in advance.

Role and Choice of the Notary

Using a notary is mandatory. It is often the buyer who chooses them, but in major cities, agencies work with firms they know well. The notary:

Their fees are strictly regulated by law (GNotKG) and are generally around 1 to 1.5% of the price, plus land registry fees (about 0.7 to 1%).

Registration in the Grundbuch: The Actual Transfer of Ownership

In Germany, you do not become the owner on the day of signing with the notary, but on the day your name is entered in the land register. Between the two:

– the notary has a prenotation (Auflassungsvormerkung) registered to block the sale and prevent a double transfer;

– you pay the price to the seller (generally 4 to 6 weeks after signing);

– you pay the real estate transfer tax to the authorities.

Key handover often occurs 4 to 8 weeks after the deed, once payment is confirmed. Final registration can take a few more weeks. For an expatriate, one must anticipate a more spread-out timeline than in France.

How Much Does Buying in Germany Really Cost?

One classic pitfall for expatriates is underestimating the weight of “Nebenkosten”, these ancillary costs added to the purchase price. They average between 10 and 12% of the price, sometimes more depending on the federal state (Land) and agency.

Typical Structure of Acquisition Costs

The following table summarizes, for guidance, the main cost items:

Cost Item	Order of Magnitude
Real Estate Transfer Tax (Grunderwerbsteuer)	3.5% to 6.5% of price depending on the Land
Notary Fees	1% to 1.5%
Land Register (Grundbuch) Registration Fees	0.7% to 1.2%
Agency Commission (Maklercourtage)	3% to 7% (usually shared)
Miscellaneous (inspection, translation, etc.)	Variable amount

The real estate transfer tax varies significantly by region: 3.5% in Bavaria or Saxony, 6% in Berlin, 6.5% in some Länder like Thuringia or Schleswig‑Holstein. The agency commission has been regulated since 2021 for residential real estate: it is in principle shared between seller and buyer, each bearing 50% of the agreed sum, which often totals around 3 to 6% + VAT.

Recurring Costs: Taxes, Charges, Maintenance

Once an owner, you face several regular expenses:

For a 100 m² home, it is realistic to budget several hundred euros per month for charges and maintenance, in addition to loan repayments.

How to Get Financing in Germany as an Expatriate?

The structure of German mortgage loans differs from what many French speakers are used to. The central element is the interest rate fixation period (Zinsbindung): the rate is fixed for 5, 10, 15, or 20 years, but this does not always correspond to the total repayment period.

Functioning of German Mortgage Loans

When a German bank grants a loan, it:

– sets an effective annual interest rate (Effektivzins) including interest, fees, mandatory insurance where applicable;

– defines an annual amortization rate (Tilgung) often initially low (1 to 2%), which can be increased to reduce the term;

– locks the rate for a given period (e.g., 10 years) at the end of which the outstanding capital must be refinanced or repaid.

Typical Conditions for an Expatriate

Financing conditions vary greatly depending on whether you are a resident in Germany or not.

For an expatriate already resident with local income:

– financing possible up to 100% of the purchase price (excluding fees) for very strong applications;

– personal contribution usually expected: at least 10 to 20% to cover purchase costs and reassure the bank;

– among the most attractive interest rates in Europe, often between 1.4% and 2.5% for top profiles on short or medium fixed-rate periods (in a low-rate context, excluding episodes of sharp increases).

For a non‑resident expatriate or one whose income remains abroad:

– more restrictive banks, financing generally limited to 60–70% of the price;

– requirement for 30 to 40% equity, sometimes more;

– tighter analysis of income stability and exchange rate risk if income is not in euros.

Alternatives for French Expatriates

A French expatriate who retains assets in France can also use a setup like a mortgage-backed liquidity loan: a French bank grants a loan secured against a property owned in France (without an existing mortgage), up to 50–70% of its value. The funds can then be used to buy in Germany cash, which sometimes simplifies negotiation locally.

This approach, however, requires carefully measuring overall debt risk and the impact of simultaneous leverage in two countries.

Importance of Pre‑Approval and Advice

For an expatriate, the safest approach is to be accompanied by:

– a broker or financial advisor familiar with expatriate cases;

– a Steuerberater (tax advisor) to calibrate future deductions (interest, depreciation);

– and, if needed, an agency specialized in assisting French speakers in Germany.

A financing pre-approval, provided by the bank even before finding a property, significantly strengthens your credibility with sellers, who then know you will not sign “blindly”.

Taxation: A Framework Often Favorable to Investors

One of the major advantages of real estate investment in Germany for an expatriate remains the combination of two elements: the very broad deductibility of expenses and the famous capital gains tax exemption after ten years of ownership.

Taxes on Rental Income Received in Germany

Rental income from a property located in Germany is taxable in Germany, even if you remain a French tax resident. This rule stems from the Franco-German tax treaty, which attributes the primary right to tax rental income to the country where the property is located. In practice:

– you declare this income on a German tax return (category Einkünfte aus Vermietung und Verpachtung);

– the net income, after deducting expenses, is included in your German taxable base and taxed at the progressive rate (14 to 45%, plus solidarity surcharge);

– you also declare this income in France, but you benefit from a tax credit equal to the amount of French tax that would have been due on the same income, thus avoiding double taxation.

The major difference with France lies in the scope of deductible expenses. In Germany, one can deduct notably:

– loan interest;

– the real estate transfer tax (spread over the depreciation period);

– notary and agency fees related to the acquisition (via depreciation);

– maintenance and renovation works;

– insurance premiums, management fees, property tax;

– and especially building depreciation, generally at 2% per year over 50 years (more in some cases for new builds or eligible properties for super-depreciation).

In many setups, the sum of these deductions creates a property deficit during the first years of operation, a deficit that can be offset against other taxable income in Germany, including salaries. A highly taxed household can thus recover up to nearly half of the deficit in the form of tax reduction or refund.

Capital Gains Tax Exemption After Ten Years

Another extremely favorable peculiarity: if an individual sells their property after more than ten years of ownership, the capital gain is tax-exempt in Germany. This period can even be reduced to two years if the property served as a primary residence during that time.

– a potential “tax bonus” linked to the first rental years (deductible deficit);

– then a completely tax-neutral exit after ten years, on the German side.

Overall Tax Level

Studies show that with one or two well-calibrated properties, the effective tax rate on rental income in Germany can often fall below 10%, or even be temporarily zero thanks to depreciation.

Add to this:

– the absence of a local occupancy tax;

– property taxes generally well below those in France;

– the absence of a federal wealth tax.

For an expatriate wishing to build a long-term rental portfolio, this tax framework is one of the major arguments in favor of Germany.

Renting in Germany: A Dynamic but Heavily Regulated Market

Investing in Germany isn’t just about buying: it’s also about accepting to play by rules that are very protective of tenants. German rental law, enshrined in the Bürgerliches Gesetzbuch (BGB), is considered one of the most detailed in Europe.

Rental Contracts and Tenant Security

In practice, almost all dwellings are rented with a written contract (Mietvertrag). Indefinite duration is the norm; fixed-term leases are only valid in specific, properly justified cases. The tenant can in principle terminate with three months’ notice without justification, whereas the landlord must provide a legitimate reason (personal need, major renovations, serious tenant breaches, etc.) and respect a notice period that lengthens with the tenant’s tenure.

Rent increases are strictly regulated:

Contracts can also include indexation to the price index (Indexmiete) or a graduated increase (Staffelmiete), but in all cases, the landlord’s freedom is far from absolute.

For an expatriate investor, this means that one cannot build a business plan on assumptions of massive short-term rent hikes. Yield is thought of more over the long term, based on a combination of stable income and property appreciation.

Security Deposit, Charges, and Maintenance

The security deposit (Kaution) is capped at three months’ rent excluding charges (Kaltmiete), generally paid in installments at the start of the lease and placed by the landlord in a segregated, interest-bearing account. It can only be used at the end of the lease to compensate for unpaid rent, damages, or a charge balance.

Routine maintenance and major repairs are generally the landlord’s responsibility, although contracts can allocate certain “minor repairs” to the tenant under strict conditions. Here again, the legal framework leaves limited room for maneuver for the investor: it’s better to integrate the real cost of maintenance into your projections rather than hope to transfer it massively to the tenant.

Investment Strategies for Expatriates in Germany

Once the economic, legal, and tax framework is established, the next step is to build a strategy suited to your profile. Several main approaches emerge.

Primary Residence vs. Pure Rental Investment

For an expatriate planning to stay in Germany for several years, buying a primary residence can make sense, especially in a context of rising rents and a relatively stable market. The advantages:

– protection against rent increases;

– possibility to depreciate purchase costs over the stay if it exceeds three years;

– potential capital gains tax exemption if sold after two years of occupancy as a primary residence.

The disadvantage lies in the lack of flexibility: if you have to leave Germany sooner than planned, you’ll face a choice between selling perhaps too early (before appreciation has covered acquisition costs) or renting from a distance, with the associated management constraints.

Conversely, a pure rental investment, conceived as such from the start, can:

Old vs. New, City Center vs. Periphery

Another structuring choice concerns the type of property and its location:

– old apartments (Altbau) in city centers often offer good appreciation potential and sustained demand, but rents are sometimes capped at levels below market, reducing immediate yield;

– new constructions (Neubau) have higher purchase prices but better energy performance and, in some cases, less exposure to rent caps, allowing for potentially higher rents;

– well-connected suburbs can offer a better price/rent ratio than the hyper-center, at the cost of a slightly different clientele and sometimes lower liquidity on resale.

Diversify and Maintain Liquidity

Many experts stress a point often overlooked by expatriates: do not lock up all your capital in a single primary residence. The ideal combination, for many situations, remains:

– a reasonable level of equity in one or two wisely chosen properties;

– sufficient cash reserves to handle renovations, vacancy periods, professional or family changes;

– complementary investments (German pension insurance, funds, etc.) to not depend exclusively on real estate.

The German real estate market offers a safe and transparent framework, but it is not a substitute for a comprehensive wealth strategy.

Common Mistakes of Expatriates… and How to Avoid Them

Several years of field feedback on expatriate projects lead to identifying some recurrent mistakes:

The remedy lies in rigorous preparation: simulation of all costs over time (loan, charges, maintenance, taxation), validation of financing upfront, use of professionals (notary, lawyer, tax advisor, specialized agency), and acceptance of the idea that a good investment in Germany is often a “boring” investment: not spectacular in the short term, but very reliable in the long term.

In Summary

For an expatriate settled in Germany, investing in local real estate is neither an automatic given nor a risky adventure. It is a choice to be made at the intersection of several parameters:

Well-prepared, coupled with appropriate support, and conceived with a horizon of at least a decade, a real estate investment in Germany can become a solid pillar of an expatriate’s wealth strategy. It’s not about seeking a speculative “hit”, but about relying on what Germany most characteristically offers: security, structure, and reliable long-term growth.