Tax on land sales: What sellers need to consider

Key facts at a glance

• Possible taxes on land sales: real estate transfer tax, capital gains tax, trade tax

• Real estate transfer tax is usually paid by the buyer

• Capital gains tax no longer applies after a holding period of ten years

• Trade tax may apply in cases of commercial land trading

• Land sales are reported to the tax office by the notary, which will issue a tax assessment if applicable

Tax on land sales: different types of taxes

When selling developed or undeveloped land, different types of taxes may apply. Below, we take a closer look at which taxes these are and under what conditions they become due.

Capital gains tax on land sales

If you want to sell land and avoid taxes, you should pay attention to the so-called speculation period. If you acquired the land less than ten years ago and sell it before this period expires, capital gains tax will apply. This tax is calculated based on the profit generated from the sale—not the total sale price—and depends on your personal income tax rate.

For developed properties, you may avoid capital gains tax even before the ten-year period expires if you can prove that you have used the property yourself for at least the last three years prior to the sale.

Real estate transfer tax for buyers

Another tax associated with land sales is the real estate transfer tax. This is typically paid by the buyer, unless otherwise agreed in the contract. The tax is calculated based on the purchase price of the land. A few weeks after the transaction is completed, the buyer receives a tax assessment from the tax office and must pay the tax within one month.

Real estate transfer tax rates in Germany’s 16 federal states (as of 2026):

• 6.5% in North Rhine-Westphalia, Saarland, Brandenburg, and Schleswig-Holstein

• 6% in Berlin, Mecklenburg-Western Pomerania, and Hesse

• 5.5% in Bremen, Hamburg and Saxony

• 5% in Baden-Württemberg, Rhineland-Palatinate, Lower Saxony, Saxony-Anhalt, and Thuringia

• 3.5% in Bavaria

Special tax considerations for land sales

German tax law includes several special cases where tax on land sales may not apply, where additional taxes may arise, or where different time limits apply. These primarily concern inheritance cases, sales without profit, commercial land trading, and the speculation period for undeveloped land.

Selling undeveloped land

If you sell undeveloped land within the ten-year speculation period, you cannot avoid tax through personal use. The exemption for owner-occupation applies only to developed properties. Therefore, to sell undeveloped land tax-free, you must always wait until the ten-year period has expired.

If this is not possible, capital gains tax will apply to the profit from the sale. However, expenses related to the purchase and subsequent investments—such as notary fees or costs for connecting to drainage systems—can be deducted to reduce the taxable amount.

Trade tax liability in special cases

Additional taxes may apply if you sell more than three properties within five years. In such cases, the tax office may classify your activity as commercial property trading, making you liable for trade tax.

Since commercial property trading can also have further legal implications, consulting a tax advisor or legal expert is strongly recommended.

Tax on land sales in inheritance cases

Whether tax applies when selling inherited land also depends on the speculation period. However, this period does not start when you inherit the property. Instead, it is carried over from the original owner.

For example, if the deceased owned the property for 15 years, the speculation period has already expired, and you can sell the land tax-free. If the property was purchased only seven years ago, you must wait another three years before selling it tax-free.

Selling land without profit

Another special case is selling land without making a profit. While the buyer must still pay real estate transfer tax, you as the seller generally do not have to pay capital gains tax if no taxable profit is generated—even if the speculation period has not yet expired.

Selling land and calculating taxes correctly with Engel & Völkers

Would you like to sell land but prefer not to handle the search for potential buyers yourself? The team at Engel & Völkers can take care of the entire sales process for you. On your behalf, we market your property through relevant channels, identify qualified buyers, organize viewings, and guide you through every step of the transaction. You may also be interested in our article on real estate and taxes.

Conclusion: observe deadlines and avoid taxes on land sales

To avoid taxes on land sales, ideally you should observe the ten-year speculation period between purchase and sale. In the case of developed properties, tax liability may also be avoided within this period if you can prove at least three years of personal use before the sale.

If neither condition applies, capital gains tax will be charged on the land sale. However, this tax is based on the profit generated, not the total sale price. Real estate transfer tax is generally paid by the buyer and applies to both developed and undeveloped land, regardless of any holding period.

Do you have questions about a planned land sale? Feel free to contact us directly.