How do brokers pay their taxes

Broker: In these cases you can deduct the commission

A broker charges a commission for his services. The amount varies depending on the region. As a rule of thumb, if you buy a property, the brokerage costs are between three and seven percent of the purchase price. If you rent a property, the commission is two net rents plus VAT. Depending on the city or region, this can quickly become expensive.

The decisive question is who pays the broker's commission. Until the introduction of a new law on June 1, 2015, this was usually the prospective tenant for a rented property. However, since the law came into force, the broker's purchaser has been obliged to pay the commission. That means: In 2020, this is usually the landlord as well. However, if you hire a broker yourself to find a rental apartment, you will have to pay the commission yourself. After all: If you move to the rented apartment for professional reasons, you can enter the brokerage fee in your tax return.

Here are the different options:

Moving to a rented apartment for professional reasons: You can deduct the commission

If you move into a rented apartment for professional reasons, you can deduct the costs of the broker as income-related expenses from tax.

A job-related move occurs, for example, if your boss transfers you to a new place of work or you take a new job in another city. Even if you, as a commuter, save at least one hour of travel time by moving, this is considered a move for job reasons. In such a case, you can deduct many other costs in addition to the broker's commission. You can find out more about this in our article Moving for professional reasons: Deducting costs.

Double housekeeping: You can deduct the brokerage fee

If you rent a second home at your place of work for professional reasons and this is recognized as double housekeeping, you can enter the brokerage costs as income-related expenses in your tax return. However, this recognition has been made more difficult since November 2020.

Private relocation: You cannot deduct brokerage commission

If you move for private reasons, you will receive nothing from a tax point of view. The commission for the broker is then considered a private matter and cannot be deducted from tax. After all: if you have to renovate something in your new apartment, you can claim the costs of the craftsmen - as a household-related service.

Moving into your own home for professional reasons: You cannot deduct any commission

If you hire a realtor to look for your own home, you will not be able to enter the broker's commission in your tax return despite your job-related move. The reason given by the tax authorities ‘: Since you are buying the property, the broker's fee is one of the so-called incidental acquisition costs - and you cannot deduct it.

By the way:

Since December 23, 2020, it has been in force nationwide that the broker's commission for real estate sales must be shared between buyer and seller. Specifically, this means: The party who hired the broker pays at least half of the brokerage fee. The "law on the distribution of brokerage costs when brokering sales contracts for apartments and single-family houses" is intended to relieve real estate buyers in view of rising real estate prices and the associated ancillary purchase costs. As part of the law, the buyer is only required to pay his share of the brokerage fee after the seller has demonstrably paid his share.

Rental: You can deduct the broker's commission

You want to buy a property in order to rent it out. If you hire a broker to arrange a rental property for you, you as the landlord can claim the commission for tax purposes. But not as advertising expenses. In such a case, the brokerage fee is one of the incidental acquisition costs. These are added to the purchase price and then depreciated using the straight-line method. Find out more in our overview What a landlord can deduct from tax. Our article Tax advantages for the construction of rental apartments could also be interesting and helpful for you.

This is an editorial text from the VLH editorial team. There is no advice on topics that are outside the tax advisory powers of an income tax aid association. Consulting services in specific individual cases can only be provided within the framework of the establishment of a membership and exclusively within the advisory authority according to § 4 No. 11 StBerG.