Selling property: the 10-year rule

The rule

In Germany, gains from selling privately held property are taxable if no more than ten years lie between purchase and sale. This is commonly called the speculation period (Spekulationsfrist); the law speaks of a private sale transaction (§ 23 EStG). The gain is added to your other income and taxed at your personal rate, not at the flat rate for investment income.

How the ten years are counted

What counts are the days on which the notarised contracts are signed, not the handover and not the land register entry. The period starts the day after the purchase contract and ends ten years later on the day that matches the purchase date. A sale contract from the following day on is outside the period.

A contract subject to a condition precedent counts from the day it is signed. If the notary appointment is a single day too early, the whole gain is taxable.

Exception: your own home

The gain is also tax-free before the ten years are up if you

• lived in the property exclusively yourself from purchase to sale, or
• lived in it yourself in the year of sale and the two years before.

For the second option, according to the Federal Fiscal Court a continuous period spanning three calendar years is enough, as long as the middle year is fully covered; in the first and last year a few days suffice. Moving in on 31 December 2024, living there all of 2025 and moving out on 2 January 2026 allows a tax-free sale in 2026, even if the flat is let until then.

Own use also includes a second home or holiday home that is not let. Letting your parents or a separated spouse live there does not count.

How the gain is calculated

Acquisition cost includes the purchase price and purchase costs, plus the cost of later extensions and conversions. Costs of the sale are, for example, agent and notary, as far as you pay them.

Why depreciation comes back

If you let a flat, you depreciate the building every year and save tax. On a sale within ten years, this depreciation is deducted from the acquisition cost. The gain rises by exactly the depreciation claimed, including special depreciation, and the tax saved in earlier years is collected again.

After the ten years, none of this matters: the gain is tax-free and you keep the depreciation. How it is calculated is explained in Depreciation on rental property.

A worked example

Lindenstraße 14 from the Wertavo demo portfolio: bought on 15 June 2018 for €268,000 plus €21,400 purchase costs, let ever since. By the end of November 2026, €39,355 of depreciation has been claimed, €4,630 a year. Sold on 1 December 2026 for €307,000.

Without depreciation the gain would be €17,600; more than two thirds of the taxable gain is depreciation coming back. Waiting with the sale until 16 June 2028 makes the entire gain tax-free.

Gifts and inheritance

If you inherit a property or receive it as a gift, you take over the running period: the previous owner’s purchase contract still counts. An inherited flat that was bought eight years ago can therefore be sold tax-free after two more years.

When it becomes a business

Buying or building and selling more than three properties within about five years can make you a commercial property dealer in the eyes of the tax office (the three-property rule). The gains are then business income, trade tax applies, and the ten years no longer help. The limit is a guideline of the tax authorities, not a rigid rule.

Exemption limit and losses

Gains from all private sales in a year stay tax-free as long as they total less than €1,000 (since 2024, previously €600). It is an exemption limit, not an allowance: from €1,000 on, the whole gain is taxable. Losses from private sales can only be offset against gains from such sales, in the same year, the previous year or later years.