Buying in Berlin vs back home: what Americans really pay

Berlin will sell you an Altbau apartment with no questions about your passport, and Germany may let you sell it tax-free. The IRS has its own rules.

The short version

• Americans can buy in Berlin on the same terms as Germans. There's no foreign-buyer approval or surcharge.
• The big upfront cost is the 6% property transfer tax (Grunderwerbsteuer), plus notary and land registry fees and, often, half a broker's commission [1][2].
• Germany doesn't tax a sale after ten years of ownership, or sooner if you lived there in the year of the sale and the two years before [3].
• The IRS taxes your worldwide gain anyway. Section 121 shelters up to USD 250,000 (USD 500,000 joint) on a main home, and a tax-free German sale leaves no German tax to credit [4][5].
• Keeping a house in Chicago you've left? The exclusion lasts only while you still pass the 2-of-5-years test [4].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (USD 1.1163 per euro), rounded.

Can Americans buy in Berlin?

Yes. Germany has no foreign-ownership approval, no quota and no residency requirement for buying a home. You can buy in Prenzlauer Berg or Neukölln on a work visa, a freelance permit or no German visa at all.

What's different from a closing back home is who runs it:

1. The notary is the closing. A German Notar is a neutral public official who drafts the contract, reads it aloud at the signing (in German, so bring a sworn interpreter if you need one) and handles the land registry (Grundbuch) entries.
2. The land registry protects you. The notary registers a priority notice (Auflassungsvormerkung) for you before you pay, and you become owner when the Grundbuch is updated. There's no title insurance in the American sense.
3. The tax office signs off. The notary reports the sale to the tax office within two weeks. The land registry won't put you down as owner until the transfer tax is paid.
4. Check the building. Most Berlin apartments sit in a condominium community (WEG). Ask for recent owners' meeting minutes, the maintenance reserve and planned repairs before you sign.

Getting a loan: German bank or US lender?

In Berlin. German banks lend to foreign residents with a residence permit and German income, though some are cautious with fixed-term permits or very new arrivals. They'll want payslips, your Schufa credit report and a solid down payment. Expect to cover the purchase costs (tax, notary, broker) out of your own pocket; banks generally don't like lending against them. Long fixed-rate periods of ten years or more are common, which feels closer to a US 30-year mortgage than many expats expect.

Back home. Borrowing against a US home and paying cash in Berlin is the other route, but qualifying with foreign income takes some legwork. Our guide to US mortgages for Americans living abroad covers what lenders want.

The currency trap. The IRS measures a euro mortgage in dollars. If the euro weakens while you owe it, paying the loan off can create a taxable US currency gain, even though you repaid exactly what you borrowed, and a currency loss on a personal home loan usually isn't deductible. Our guide to currency gains on a foreign mortgage explains how it works.

Costs side by side

Rates as of November 2026.

Illustration only. On a EUR 500,000 apartment (about USD 558,000), the transfer tax alone is EUR 30,000 (about USD 33,500) [1]. Notary, land registry and any broker share come on top, so budget for total purchase costs well beyond that before you run the numbers.

Tax when you sell

The German side

Germany treats a home sale as a "private sale transaction" under Section 23 of its income tax law. The gain is taxable only if you sell within ten years of buying. Even inside ten years, it's tax-free if you used the home only for yourself from purchase to sale, or if you lived in it in the year of the sale and the two years before [3]. So an apartment you lived in from 2024 to 2026 and sell in 2026 is generally exempt in Germany, as is one you rented out but held for more than ten years.

The US side

Uncle Sam taxes your worldwide gain, measured in dollars:

1. Section 121 works for a foreign home. Own the apartment and live in it for at least 24 months of the 5 years before the sale, and up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded [4]. Nothing limits it to US homes.
2. The ten-year mismatch. A rental you've held for twelve years is tax-free in Germany but fully taxable in the US. With no German tax paid, there's nothing to credit.
3. The foreign tax credit. When Germany does tax a sale (a rental sold inside ten years), that German income tax goes on Form 1116 against US tax on the same gain [5]. The Grunderwerbsteuer and Grundsteuer aren't income taxes and don't count.
4. Currency counts. Your dollar cost uses the rate when you bought and your proceeds use the rate when you sell. A stronger euro can create a US gain on an apartment that sold for exactly what you paid.

Your old house in Chicago

The 2-of-5-years clock keeps ticking after you move. After more than three years away, the exclusion is usually gone, and depreciation from renting it out is taxed on sale even when the rest of the gain is excluded. Illinois can also tax the gain on Illinois property. Our guide to selling your US home after moving abroad has the details.

Renting it out

The German side. Rent from a Berlin apartment is taxable German income, even if you've moved away. You deduct interest, building costs and depreciation: 2% a year for most buildings completed from 1925 through 2022, 2.5% for older buildings and 3% for those completed after 2022 [7]. Short-term vacation rentals are tightly regulated in Berlin and can also bring VAT, trade tax and the city's overnight stay tax [1].

The US side. Report the rent on Schedule E. A Berlin apartment is used predominantly outside the United States, so you must depreciate it under the Alternative Depreciation System over 30 years, not the 27.5 years you'd use for a rental in Chicago [8][9]. German income tax on the rent can go on Form 1116.

If it's the place back home you're renting out, our guide to rental income from a US property covers the stateside side.

Which makes sense for whom

• Staying long term. Berlin can make sense. Live in it two of the five years before you sell and Section 121 covers most ordinary gains; Germany usually exempts the sale too.
• Retiring in Germany. Similar logic, but plan the estate: Germany taxes inheritances by the heir, the US taxes estates, and both can reach a Berlin home. See wills and estate planning across two countries.
• Moving back in a few years. Renting in Berlin and keeping (or buying) stateside is usually simpler. Transfer tax and notary fees take years to recoup, and a euro swing can eat a modest gain.
• Buying to rent out. Run the numbers on both sides. Germany may never tax the gain if you hold ten years; the IRS will, and it recaptures depreciation.

A US expat tax preparer (or a German tax adviser) can check your situation before you sign at the notary.

Sources

1. Verkauf und Kauf von Immobilien – Senatsverwaltung für Finanzen Berlin
2. FAQ Grunderwerbsteuer – Senatsverwaltung für Finanzen Berlin
3. § 23 EStG, private Veräußerungsgeschäfte – Gesetze im Internet (Federal Ministry of Justice)
4. Topic no. 701, Sale of your home – IRS
5. Foreign tax credit – IRS
6. BGH: Maklerprovision muss hälftig geteilt werden – Haufe
7. § 7 EStG, Absetzung für Abnutzung – Gesetze im Internet (Federal Ministry of Justice)
8. Publication 527, Residential rental property (2025) – IRS
9. 26 U.S. Code § 168, alternative depreciation system – Cornell Law School LII

Keep reading

• German taxes for Americans: how they fit with your US return
• Renting in Berlin
• Schufa: Germany's credit score
• Keeping or renting out your US home after you move abroad