Selling Real Estate Held as Private Assets: Capital Gains Tax in Austria and Germany Compared

Published on 23.10.2026

Selling Property: Austria vs. Germany

Anyone holding a property as an investment should know before buying how much of the later sale proceeds will actually remain. A large part of this “gain” is often nothing more than inflation. Germany and Austria treat it in fundamentally different ways: Germany exempts the sale of privately held property after ten years, while Austria taxes it at a flat rate of 30 %, with no time limit at all. Which system is cheaper depends mainly on the holding period. This article sets out both regimes side by side, works through an example with a property bought for one million euros and names the cases in which the result turns out differently. The German ten-year speculation period (Spekulationsfrist), i.e. the holding period, in particular when moving abroad, is covered in detail in our article on the speculation period under Section 23 of the German Income Tax Act (Einkommensteuergesetz, EStG) and emigration.

The key difference at a glance

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Germany: ten-year holding period, then tax-free

Under Section 23(1) sentence 1 no. 1 EStG, the sale of real property held as private assets is only a taxable private disposal transaction if no more than ten years elapse between acquisition and disposal. Anyone who holds the property for longer sells it tax-free, regardless of how much its value has increased.

Within the holding period, the gain is taxed at the personal income tax rate, i.e. up to 45 % plus solidarity surcharge and, where applicable, church tax. The gain is the difference between the sale price and the acquisition costs. Under Section 23(3) sentence 4 EStG, the acquisition costs are reduced by the depreciation deducted from rental income. The depreciation that saved tax during the rental period therefore increases the taxable gain if the property is sold within the holding period.

Properties used for the owner’s own residential purposes are exempt, either if they were used that way continuously since acquisition or in the year of sale and the two preceding years (Section 23(1) sentence 1 no. 1 sentence 3 EStG). In addition, gains remain tax-free if the total gain from private disposal transactions in the calendar year is less than €1,000 (Section 23(3) sentence 5 EStG). For a property sale, this tax-free threshold (Freigrenze; once exceeded, the entire gain is taxable) is of practically no relevance.

A change of residence does not affect the ten-year holding period: even anyone who moves abroad while owning German property remains subject to limited tax liability in Germany. What this means for the timing of a sale is explained in our article on selling real estate before emigrating.

Austria: real estate capital gains tax without a holding period

Austria abolished its former speculation period with the 2012 reform. Since then, every sale of property held as private assets has in principle been taxable under Section 30 EStG 1988, whether it was held for two or for thirty years. Under Section 30a(1) EStG 1988, the tax rate is a flat 30 %. On application, the general progressive tariff can be applied instead (option for standard taxation, Regelbesteuerungsoption, Section 30a(2) EStG 1988), which can be worthwhile above all where other income is low.

In Austria, too, the income is the difference between the sale proceeds and the acquisition costs. Under Section 30(3) EStG 1988, the acquisition costs are reduced by depreciation to the extent it was deducted when determining income. Depreciation is therefore recaptured just as in Germany, only without any time limit.

There is no longer any adjustment for inflation. The former inflation discount no longer applies to sales from 01.01.2016; this abolition is based on the 2015/2016 Tax Reform Act (Steuerreformgesetz 2015/2016, Federal Law Gazette, Bundesgesetzblatt, BGBl. I 118/2015), and Section 30(3) EStG 1988 has contained no discount since then. This must be distinguished from the decision of the Austrian Constitutional Court: it struck down Section 30(3) second indent EStG 1988 as amended by BGBl. I 112/2012, i.e. the calculation of the former inflation discount, as contrary to the principle of equality (VfGH 03.03.2017, G 3/2017 et al., promulgated in BGBl. I 34/2017). No new compensation for inflation has been introduced.

The main residence exemption

In Austria, the sale of a house or flat that served as the seller’s main residence remains tax-free if the main residence is given up and one of two conditions is met (Section 30(2) no. 1 EStG 1988):

• it was the main residence continuously for at least two years from acquisition until sale, or
• it was the main residence continuously for at least five years within the last ten years before the sale.

Self-constructed buildings are also exempt to the extent that they were not used to generate income in the last ten years (Section 30(2) no. 2 EStG 1988). For an investor buying a rented property, neither exemption applies.

Worked example: sale after 6 and after 11 years

The following example shows how differently the two systems work for the same property and the same increase in value.

Assumptions: purchase today for one million euros, rented out, building share 70 % (in Austria, subject to proof); increase in value of 2.5 % per year, entirely due to inflation (so no real gain); depreciation of 2 % in Germany and 1.5 % in Austria for residential buildings (Section 16(1) no. 8 lit. d EStG 1988); German gain taxed entirely at the top rate of 45 % plus solidarity surcharge; incidental acquisition costs and church tax are disregarded.

Annual depreciation therefore amounts to €14,000 in Germany (2 % of €700,000) and €10,500 in Austria (1.5 % of €700,000).

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If the property is sold after six years, the owner pays around €116,000 in Germany and around €67,000 in Austria. After eleven years, the picture is reversed: no tax is due in Germany, while Austria levies around €128,000, even though the owner has not gained a single cent in real terms. Of the roughly €428,000 of taxable income, around €312,000 is pure inflation and €115,500 is recaptured depreciation.

In Austria, the building share of 70 % requires proof; only then does the example compare the same property in both countries. Without proof, a flat-rate share for land applies in Austria. With a building share of 60 %, the real estate capital gains tax would be around €64k instead of €67k and €123k instead of €128k.

For Austria, the example uses straight-line depreciation of 1.5 % for simplicity. If accelerated depreciation is used for a more recent building (see caveats), the recaptured depreciation is higher, and so is the tax on the sale.

The German figure assumes that the entire gain is taxed at the top rate. If the owner’s other income is lower, the tax falls accordingly; at 42 % plus solidarity surcharge, it would be around €108,000 after six years. This does not change the overall picture.

Assessment: when which system is cheaper

• Short holding period (under ten years): Austria is cheaper, because the flat rate of 30 % is below the German top rate.
• Long holding period (over ten years): Germany is considerably cheaper. The sale is tax-free, and the depreciation used to reduce tax during the rental period is never recaptured.
• Inflation: Austria permanently taxes even pure inflation gains at 30 %, after 11, 20 or 30 years. The longer the holding period, the larger this share of the taxable gain becomes.

For investors, this means: anyone planning a property as a long-term investment should build the holding period into the calculation from the outset. In Germany, the date of the notarised purchase agreement determines when the holding period begins, and selling just a few months too early can cost a six-figure sum. Austria has no such cut-off date; there, the tax on the increase in value has to be priced in from the start. How ongoing rental income is taxed when owner and property are in different countries is explained in our article on the taxation of rental income from a property abroad.

Caveats and special cases

Germany: commercial property dealing

Commercial property dealing (gewerblicher Grundstückshandel) generally exists where at least four properties are sold in close temporal connection, as a rule within five years between acquisition or construction and sale (German Federal Fiscal Court, Bundesfinanzhof, BFH 23.08.2017, X R 7/15; Federal Ministry of Finance, BMF 26.03.2004, Federal Tax Gazette, Bundessteuerblatt, BStBl I 2004, 434). The five years are a guideline value, not a rigid limit. The properties then no longer count as private assets, and the exemption after ten years may be lost. Anyone holding several properties and planning sales should have the order and timing reviewed in advance. A property GmbH (German private limited company) is not a simple way out, because the ten-year holding period does not exist within a company in the first place; see our article The property GmbH as a supposedly clever tax-saving idea (in German).

Germany: higher depreciation for new buildings

For residential buildings completed after 31.12.2022, straight-line depreciation is 3 %, and declining-balance depreciation is also available for certain new buildings. This lowers tax during the rental period, but correspondingly increases the taxable gain if the property is sold within the ten-year holding period. The worked example assumes an existing building with 2 % depreciation.

Austria: accelerated depreciation for more recent buildings

In addition to straight-line depreciation of 1.5 % for residential buildings (Section 16(1) no. 8 lit. d EStG 1988), accelerated depreciation is available for buildings acquired or constructed after 30.06.2020: up to three times the regular rate in the first year and up to twice the regular rate in the second year (Section 16(1) no. 8 lit. e EStG 1988). For residential buildings completed in 2024 to 2026, three times the rate also applies in the two following years under certain conditions, including the klimaaktiv Bronze standard (Section 124b no. 451 EStG 1988). As in Germany, the higher depreciation lowers tax during the rental period, but increases the depreciation recaptured on sale and thus the real estate capital gains tax.

Austria: legacy assets (Altvermögen)

For properties that, on 31.03.2012, were no longer within the former speculation period (not steuerverfangen; as a rule acquired before 01.04.2002, so-called Altvermögen, i.e. legacy assets), a flat-rate calculation of the gain applies under Section 30(4) EStG 1988. For sales up to 31.12.2026, the acquisition costs are set at 86 % of the sale proceeds, or only 40 % in the case of rezoning after 31.12.1987. For sales after 31.12.2026, the figures are 80 % and 30 % respectively (Budget Accompanying Act 2027-2028, Budgetbegleitgesetz, BGBl. I 62/2026). For rezoning after 31.12.2024, a rezoning surcharge of 30 % is added for sales after 30.06.2025 (Section 30(6a) EStG 1988, BGBl. I 25/2025). For a purchase made today, the rules on legacy assets are irrelevant.

Church tax

Church tax is not included in the example. For church members, it further increases the German burden on a sale within the holding period.

Cross-border cases

The example compares each system on its own. If the owner lives in one country and the property is located in the other, the double taxation treaty between Germany and Austria must also be examined; the basics are explained in our article on double taxation treaties and emigration (in German). Acquisition costs, such as real property transfer tax when buying abroad, also belong in a complete calculation. The description of Austrian law serves as a comparison here; for implementation in Austria, an adviser admitted there should be consulted.

Where the legal position in Germany is unclear, it is advisable to obtain a binding ruling from the tax office (verbindliche Auskunft, Section 89(2) of the German Fiscal Code, Abgabenordnung, AO) before the sale. The fee for this is, as a rule, a fraction of the tax at stake in a property sale.

Conclusion

Germany and Austria tax the sale of privately held property according to opposite principles. Germany imposes a high burden on short-term sales but exempts everything after ten years, including the depreciation used beforehand. Austria demands less at 30 %, but always, and without regard to inflation. For a holding period under ten years, Austria comes out ahead in the example; for a long-term investment, Germany is considerably better. The decisive point is to think about the holding period before buying.

Frequently asked questions

Is the sale of a property in Germany always tax-free after ten years?

For property held as private assets by individuals, yes, provided more than ten years lie between the purchase agreement and the sale agreement. The position is different if the property forms part of business assets, for example in the case of commercial property dealing or within a GmbH.

Is there still a speculation period in Austria?

No. Since the 2012 reform, the sale of property held as private assets has been taxable regardless of the holding period. The main exceptions are the main residence and self-constructed buildings.

Does Austria take inflation into account when property is sold?

No. The former inflation discount was abolished for sales from 01.01.2016. Tax is levied on the nominal difference between proceeds and acquisition costs, reduced by the depreciation claimed.

Why does depreciation increase the capital gain?

In both countries, the depreciation deducted during the rental period reduces the acquisition costs. The more depreciation has been claimed, the lower the remaining acquisition costs and the higher the taxable gain. In Germany, this only applies to a sale within the ten-year holding period; in Austria, it always applies.

What tax rate applies in Austria when property is sold?

In principle, the special rate of 30 % under Section 30a(1) EStG 1988. On application, the general tariff can be applied, but only uniformly for all income subject to the special rate.

As of: 22.10.2026. Sources: Section 23 EStG (gesetze-im-internet.de); Sections 16, 30, 30a, 124b EStG 1988 (Austrian Legal Information System, RIS); BGBl. I 62/2026 (Austria, legacy assets); VfGH 03.03.2017, G 3/2017 et al.; BFH 23.08.2017, X R 7/15. This article does not replace advice in an individual case.

Dr. Johannes Fiala, Rechtsanwalt (German lawyer), and the law firm, which focuses on international inheritance law, tax law and asset protection in Munich, advise entrepreneurs and high-net-worth individuals on property investments with a German and international dimension, from tax planning of the holding period to the sale and succession planning. Dr. Fiala has published extensively on emigration and asset protection. Feel free to contact the firm without obligation to discuss your individual situation in an initial consultation.