Ranked by several specialized magazines in the top 3 of the ideal cities for a real estate investment in Europe, Berlin attracts both investors and French individuals. Are you also interested in the Berlin real estate market? Are you still hesitating to get started? Here are 3 good reasons toinvest in real estate in Berlin.
Summary
Real estate in Berlin: very attractive prices and strong rental demand
Whether for a primary or secondary residence, or for a rental investmentthe German capital offers very attractive purchase price.
For such a prestigious capital, prices on the Berlin real estate market are indeed exceptionally low. With an average hovering around €4,000/m²East Berlin 2 to 5 times cheaper than Paris or Londonand even some other major German cities such as Munich, Frankfurt or Dortmund.
In some areas of the German capital, land prices even start below €1,000 per square meter.
Since 2016, investing in real estate Berlin therefore offers a high potential for capital gains amounting to more 10% per year. You can thus gradually build up a inheritance whose value increases over the years.
In addition, rental demand is very strong in Berlin, with only 15% ownersand default rates are very low.
Favorable financing options for the purchase of real estate in Berlin
Although real estate prices in Berlin are relatively affordable, you will probably need bank financing for the purchase of your house or apartment. For this, taking out a mortgage is the most obvious solution.
However, obtaining a loan from a French bank to finance a property purchase in Germany is not necessarily the best solution. The interest rates applied on real estate loans across the Rhine are indeed lower than here and in the rest of Europe.
In addition, unlike French banks, German banks do not require you to take out borrower insurance before obtaining a mortgage.
However, before getting started, it is essential to have your property properly assessed before applying for a loan. You must indeed ensure that, combined with your personal contributionthe credit amount will be sufficient to cover all costs.
Attractive taxation for your real estate investment in Berlin
If the transfer costs amount to 5.5% in Berlin, the property tax is very low.
No double taxation
French tax residents are not subject to double taxation on their rental investment. Although these rental income are declared to the French authorities, they are only taxed in Germany. This tax varies between 15 and 42%, added to the Berlin solidarity tax (5.5%).
Deductible expenses
As a rental investor, you can deduct a number of tax charges:
- Mortgage interest (whether German or not);
- Chartered accountant fees;
- maintenance costs;
- Administrative costs;
- Current expenses;
- Bank charges.
You can also deduct straight-line depreciation of the purchase price. This deduction is made on 2.5% of the purchase price for 40 years for property built before 1925. It increases to 2% for 50 years for property built after 1925.
Resale tax benefits
In France, you have to wait 30 years to resell the property without tax on the capital gain. In Berlin you can already do it after 10 years of detention.
And these are just a few of the many advantages offered by the real estate market in Berlin. To carry out your project, the ideal is also to be accompanied by a notary and a lawyer who have a good understanding of the specifics of this market.
Read also : Why and how to establish a good real estate financing plan for the bank?
