Indebted Berlin hikes tax on property sales
This week brought bad news for anyone thinking of buying a flat in Berlin, as city authorities announced they would raise tax on property sales from early next year.
Berlin's Senate passed legislation on Tuesday hiking up sales tax for those buying property in the city, newspaper the Tagesspiegel reported. From January 2014, buyers will have to pay a six percent tax on the sales price, up from the current rate of five percent.
And at the rate property is still changing hands, the Senate estimates next year's tax hike could bring in an extra €100 million a year for the hopelessly-indebted city.
Despite a recent modest upturn in the city's fortunes, "poor but sexy" Berlin remains a whopping €63 billion in debt - a figure that when calculated per head, (€22,000) works out as higher than the bankrupt US city of Detroit (€20,000 per head).
Ever-popular with foreigners looking to snap up the city's last remaining bargains, Berlin's housing market is still booming nearly a decade after the first rumours began circulating about what was then some of Europe's cheapest property deals.
Meanwhile, average prices continue to rise each year and now stand at €1,954 per square metre, up from €1,757 in 2012, according to the Berliner Morgenpost newspaper.
This means a 60-metre-square, two-bedroom flat would cost an average of €117,240 today, up from €105,420 last year.
With sales still on the increase - last year 53 percent more flats were taken out of the rental market to be sold than the year before - the increase in property sales tax is seen by the city as the best way to bring in some desperately-needed income, wrote the paper.
The city's income from property sales tax has more than doubled in the last four years, from €300 million in 2009 to an estimated €680 million in 2013.
READ MORE: Merkel's East Berlin flat - rent for €55 a night
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Berlin's Senate passed legislation on Tuesday hiking up sales tax for those buying property in the city, newspaper the Tagesspiegel reported. From January 2014, buyers will have to pay a six percent tax on the sales price, up from the current rate of five percent.
And at the rate property is still changing hands, the Senate estimates next year's tax hike could bring in an extra €100 million a year for the hopelessly-indebted city.
Despite a recent modest upturn in the city's fortunes, "poor but sexy" Berlin remains a whopping €63 billion in debt - a figure that when calculated per head, (€22,000) works out as higher than the bankrupt US city of Detroit (€20,000 per head).
Ever-popular with foreigners looking to snap up the city's last remaining bargains, Berlin's housing market is still booming nearly a decade after the first rumours began circulating about what was then some of Europe's cheapest property deals.
Meanwhile, average prices continue to rise each year and now stand at €1,954 per square metre, up from €1,757 in 2012, according to the Berliner Morgenpost newspaper.
This means a 60-metre-square, two-bedroom flat would cost an average of €117,240 today, up from €105,420 last year.
With sales still on the increase - last year 53 percent more flats were taken out of the rental market to be sold than the year before - the increase in property sales tax is seen by the city as the best way to bring in some desperately-needed income, wrote the paper.
The city's income from property sales tax has more than doubled in the last four years, from €300 million in 2009 to an estimated €680 million in 2013.
READ MORE: Merkel's East Berlin flat - rent for €55 a night
The Local/jlb
Follow us on Twitter @thelocalgermany
Like The Local Germany on Facebook
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