Speculation period for real estate in Germany: How realistic is abolition?

The current rule: Section 23 of the Income Tax Act

Under Section 23(1)(1) of the German Income Tax Act (Einkommensteuergesetz, EStG), gains from the sale of privately held real estate are tax-free if more than ten years have passed between acquisition and sale. If the property was owner-occupied in the year of sale and the two preceding calendar years, no tax applies regardless of the holding period. Within the speculation period, gains are taxed at the personal income tax rate of up to 45 percent. The rule has existed in its current form since the Tax Relief Act of 1999/2000/2002. Before that, the period was two years.

The Greens' motion in the Bundestag

On 3 June 2025, the Green party (Buendnis 90/Die Gruenen) introduced a motion in the Bundestag (printed matter 21/356) calling for the abolition of the speculation period for non-owner-occupied properties. The key points:

• Capital gains from property sales should be taxed like other investment income, with an exemption for owner-occupied housing
• Estimated additional revenue according to the motion: approximately six billion euros per year
• Abolition of the trade tax exemption for asset-managing real estate companies (estimated 1.5 billion euros)
• Tighter taxation of share deals (estimated one billion euros)

The Finance Committee held a public hearing on 23 June 2025 and recommended rejecting the motion on 25 June 2025 (printed matter 21/629).

Party positions

The call for abolition is not new. The SPD included it in its 2021 election platform, proposing to abolish the "tax exemption for capital gains on non-owner-occupied properties that currently applies after a ten-year holding period." The BSW wants to restrict the speculation period to owner-occupied housing. Die Linke additionally calls for a ban on share deals and proportional taxation on partial sales above 50 percent.

CDU/CSU and FDP do not propose any changes to the speculation period in their platforms. The AfD wants to abolish the property transfer tax for owner-occupiers but leaves the speculation period unchanged.

The coalition agreement between CDU/CSU and SPD of 9 April 2025 contains no provision on the speculation period. The SPD did not prevail on this point in negotiations. The property transfer tax also remains unchanged under the coalition agreement.

Constitutional limits

The Federal Constitutional Court ruled on 7 July 2010 (2 BvL 14/02) that the retroactive extension of the speculation period from two to ten years was partially unconstitutional. The court held that taxing an increase in value that had already occurred at the time of the law's enactment, and that could have been realized tax-free under the previous law, violated the principle of legitimate expectations (Vertrauensschutz, Art. 20(3) of the Basic Law). The court spoke of a "concretely established asset position" (konkret verfestigte Vermoegensposition) that may not be retroactively devalued.

For legislators, this means abolition of the speculation period would be constitutionally permissible but would have to apply purely prospectively. Specifically:

• Protection of existing rights for properties where the period has already expired
• A cut-off date rule for new acquisitions from the effective date onward
• Owner-occupier exemption (politically and constitutionally necessary)
• Only gains accruing after the cut-off date would be taxable

Technically, amending Section 23 EStG requires only a simple federal law. A constitutional amendment would not be necessary.

The Austrian model

Austria abolished its speculation period entirely in 2012 through the Stability Act and replaced it with the Real Estate Income Tax (Immobilienertragsteuer, ImmoESt). Capital gains are taxed at a flat rate of 30 percent, without any time limit and regardless of the holding period. The sale of a primary residence is exempt.

Tax revenue rose from 224 million euros in the first full year (2013) to 770 million euros (2019). In total, the ImmoESt has brought in approximately four billion euros for the Austrian state according to the Finance Ministry. The Greens in the Bundestag explicitly cite this model.

Germany in a European comparison

The German rule is an exception in the European context. In the majority of EU member states, capital gains from real estate are taxed without time limits:

• France: Graduated deductions, full tax exemption only after 30 years; tax rate 34.5 percent
• United Kingdom: No holding period exemption for investment properties; 18 to 24 percent
• Spain: No holding period exemption; 19 to 28 percent (graduated)
• Italy: Tax exemption after five years; 26 percent substitute tax within the period
• Belgium: Tax exemption after five to eight years; 16.5 percent

The OECD critically assessed holding period-based exemptions for real estate gains in a Working Paper (No. 72, February 2025). The DIW Berlin recommended abolishing the post-speculation-period tax exemption as early as 2021.

What this means for property owners in Berlin

For now, nothing changes. The ten-year speculation period for privately held real estate remains in effect. There is no parliamentary majority for abolition in the current legislative period.

However, the European trend and recommendations from the OECD and DIW point in one direction: taxation practices in Germany could change in the long run. If you are planning to sell an apartment or an apartment building, you can have a tax advisor review the tax framework.

A professional property valuation helps you realistically assess the taxable capital gain. You can find current transaction data and price trends in our Market Intelligence.

This article is for general information purposes only and does not constitute tax or legal advice. The content does not replace individual consultation with a tax advisor or attorney. No liability is assumed for accuracy or completeness.