Does the 10-year rule also apply to land?

Yes. Undeveloped plots are subject to the same speculation period. The three-year owner-occupation rule does not apply here, however - you cannot "occupy" a plot of land.

What happens with a partial sale before the period expires?

Only the sold share is taxable. If you sell 50 percent, you pay tax on 50 percent of the profit.

Can the tax office check whether I really lived there myself?

Yes. Registration certificate, service-charge statements, electricity consumption - the tax office has means. Sham owner-occupation is tax evasion.

Do I have to apply for the tax exemption?

No. If the conditions are met, the sale is automatically tax-free. You have to declare the sale in your tax return - but pay no tax.

How does depreciation affect the speculation profit?

The depreciation (AfA) claimed during the holding period is added back to the profit. This increases the taxable profit. With 7 years of depreciation on 140,000 euros of building share, that is 19,600 euros of additional profit.

What about the 15-percent limit on renovations?

If renovation costs within the first three years after purchase exceed 15 percent of the building value, they are treated as production costs - not as immediately deductible maintenance expenses. This changes the depreciation calculation, not the speculation period.

Is it worth bringing in a tax adviser?

For profits over 20,000 euros: yes. The costs (300-800 euros for a consultation) bear no relation to the possible tax saving. For complex cases (inheritance, gift, commercial property trading): indispensable.

Selling tax-free after 10 years

Q: Can I sell my property tax-free?

If you have held the property in your private assets for at least 10 years, no speculation tax applies. A tax-free sale may also be possible with owner-occupation in the last 3 years before the sale. We give you an initial orientation and recommend a tax adviser for the detailed check if needed.

Q: When exactly does the 10-year period begin?

With the date of the notarised purchase contract. Not with the land register entry, not with the handover of keys, not with moving in.

When can I sell my property tax-free?

The sale is tax-free if you have held the property in your private assets for at least 10 years – or if you have lived in it yourself for the last three years. The period begins with the date of the notarised purchase contract, not with the land register entry or moving in. We give an initial orientation; a tax adviser handles the detailed check if needed.

Section 23 EStG: the speculation period explained simply

Section 23 of the Income Tax Act governs when the sale of a property is taxable. The basic rule:

Let properties

Tax-free after a 10-year holding period. The period begins with the date of the notarised purchase contract — not with the land-register entry, not with the handover of keys.

Owner-occupied properties

Tax-free if you lived in it yourself in the year of sale and the two preceding calendar years. This means: with owner-occupation, the sale can be tax-free after just three calendar years.

Example: You buy an apartment on 15 January 2023 and occupy it yourself. From 1 January 2025 you meet the condition (year of sale 2025 + the two preceding years 2024 and 2023). A sale on 2 January 2025 would be tax-free.

Special case owner-occupation: tax-free after 3 years

The three-year rule is the most frequently overlooked tax advantage when selling property. It also applies if the property was previously let.

Example: in 2018 you buy an apartment as an investment. In 2022 you give the tenant notice for personal use and move in yourself. In 2025 you sell. Result: tax-free — even though the 10-year period has not yet elapsed.

Important: The owner-occupation must have existed in the year of sale and the two preceding full calendar years. “Owner-occupation” means: you or your children (for whom you receive child benefit) live there. Vacancy does not count. Letting to friends does not count.

A detail that repeatedly surprises owners in conversation: many do not know that use by children eligible for child benefit also counts as owner-occupation. Your daughter's student flat in Dresden? It counts. If she is registered there and you receive child benefit.

Calculating the speculation tax: what would be due?

When the speculation tax applies, the gain is taxed at your personal income tax rate. Not at a flat rate — but on top of your other income.

Worked example for a Dresden apartment

With a taxable income of 60,000 euros and an 84,000-euro speculation gain, you land in the top tax rate of 42 percent.

Dresden apartment 2019–2026

Purchase price 2019180.000 €

Purchase incidentals (3.5% + notary)12.600 €

Sale price 2026260.000 €

Sale incidentals3.000 €

Depreciation add-back (7 × 2% × 140k)+ 19.600 €

Speculation gain84.000 €

Tax approx. 42 %35.280 €

That is 35,280 euros you do not have to pay if you wait one year longer.

Special cases: inherited properties, gifts, production costs

Inherited properties

The deceased's holding period is credited. If your mother bought the apartment in 2014 and you inherit it in 2025, the sale is immediately tax-free. The period runs from your mother's purchase date — not from the inheritance.

Gift

As with inheritance — the donor's holding period is carried over. If your father gave you an apartment in 2024 that he bought in 2012, you can sell tax-free immediately.

Subsequent production costs

If you carried out extensive renovation after the purchase (e.g. loft conversion, extension), these costs can reduce the taxable gain. But beware: only production costs count, not maintenance expenses. The distinction is complex — ask a tax advisor.

Multiple sales

If you sell more than three properties within five years, the tax office may assume commercial property trading. Then entirely different tax rules apply — considerably less favourable. Watch out for the three-object limit.

Strategic tips: optimise the timing

Waiting almost always pays off.

If you are only one or two years away from tax exemption, wait. The saving almost always exceeds the risk of a slight price drop. On an 80,000-euro gain at a 42 percent tax rate you save 33,600 euros — that offsets a price correction of 13 percent.

Plan for owner-occupation.

If the 10-year period is still far off: check whether three years of owner-occupation is an option. Move into the apartment, live there for three calendar years, sell tax-free.

Use interim letting.

Want to sell but the period is still running? Let the property in the meantime. The rental income covers the running costs, and you can wait out the tax exemption in peace.

Mind the time of sale within the calendar year.

For the three-year rule, calendar years count, not full years. A sale on 2 January is identical for tax purposes to a sale on 30 December of the same year.

Dresden market context: wait or sell now?

The Dresden market is stable in 2026. Moderate price increases of 2–4 percent per year in good locations. No boom, no crash.

Year of purchase 01

2016 or earlier

The 10-year period has elapsed or will soon. Selling tax-free is possible. The market offers solid prices — no reason to wait, no reason to rush.

Year of purchase 02

2019–2021

Still 3–5 years until tax exemption. In most cases it pays to wait. The speculation tax on gains from the boom phase is substantial.

Year of purchase 03

2022 or later

The gains are small or non-existent (price correction 2023). A sale before the period ends would be unproblematic for tax — but rarely makes economic sense.

This information does not replace tax advice

Note: the tax matters presented on this page are simplified. For your individual situation we recommend consulting a tax advisor.