Investment Property in Berlin?

But in general, it is normally possible to get around home country CGT issues, if you sell abroad and do not remit the money etc.
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This is patently untrue, unless one undergoes the painstaking and by definition irreversible process of changing one's domicile - a process that only will satisfy the respective tax authorities over a timescale of decades.
 
Hello,

Berlin, to me, looks attractive. People already have covered the facts on previous posts.
Large funds have bought enormous amounts of property in German in the last few years, including george soros. It seems that the rental return is so good (8-12%) that long term you cannot loose (10+ years). There are companies in Ireland selling apartments at 3-5% yield, in the city center, which, to me, means they are to be avoided. Why they are so low I don't know? Think they may own the management company as well if ya know what I mean.
There remains one problem. The government owns a large amount of property and subsidises rents in E. Berlin mainly. It wants to get out of this, I have read, and therefore could off load the property at a discount to companies which then sell them on or hold them to rent out... Nobody knows what effect this will have on the rental market?

Any thoughts?

Colm5
 
Just to clarify my comments re CGT .. maybe I was being a bit general in what I said, but being honest, with the correct tax advisor and structure it is possible to minimise the tax due legally. There are multiple structures like discretionary trusts, holding companies etc, which can sell and re-invest funds without any major taxation liabilities being incurred. And I did CLEARLY STATE in the post, that it is something that should be consulted with a tax advisor in Ireland AND Germany.

One example on how to mimimise/reduce the CGT in Germany is to have the asset held my a German subsidary company, which would they be sold. There would be no taxation on the sale of the asset, and the profits could be remitted to the parent company for re-investing. However, this exact structure would have to be analysed by a german legal and tax experts. The profit stays within the germany company, and is therefore not eligible for Irish GCT, as its not personal

Personally, my situation is very different. I am no longer resident or ordinary resident in Ireland, and in the next while I imagine that my domicile will also change. Also I will add that I have a Masters in Accounting, so I am not totally talking through my a** here.


Going back to the original post, any comments re the financing of a project in Berlin ?
 
gnf_ireland said:
One example on how to mimimise/reduce the CGT in Germany is to have the asset held my a German subsidary company, which would they be sold. There would be no taxation on the sale of the asset, and the profits could be remitted to the parent company for re-investing. However, this exact structure would have to be analysed by a german legal and tax experts. The profit stays within the germany company, and is therefore not eligible for Irish GCT, as its not personal
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So you're going to leave the gain sitting the German company for ever?
 
Most people are investing for periods when they have lower income, ie retirement. At this stage the funds can be taken out as income, dividends etc, if you want. Most people with funds to invest in property are investing long-term, so they need to look at the purpose of the investment. This option MAY suit them

I was just illustrating one way in which a CGT liability can be minimised legally, since I was so blatently attacked for what I said earlier about CGT minimisation. I am not wanting to get into a massive debate on this, as everyones tax affairs are totally different, and governments have a habbit of changing the rules relatively frequently anyway. Who would have said 10 years ago that the Swiss would be withholding interest on EU citizens banking deposits ?

Again going back to the original post of financing ? Would anyone like to comment on this or are we going to continue the tax debate indefinately ?
 
A non-Irish domiciled person is not liable to CGT in ireland on a capital gain made outside of Ireland if the proceeds are not remitted to ireland

Clubman,
your point re taxation and and double taxation treaties is more important than most people realise

Every double tax treaty is as the name suggests a "treaty"

Therefore it is an agreement between two different countries on how they will resolve issues of taxation on cross border transactions bewteen their respective countries

Each one is different and should be studied (or professional advice sought) on it's own merits

Just becasue there is one, people should not assume that it is straight forward

[email protected]
 
Getting off the Tax issues for the moment,

Does anybody have any experience of getting finance for a German Property ?
Where does one start ?

I have asked some Irish banks but all said that they do not deal with financing German Property

Thanks
 
I thought about this one, and also asked... I plan to go to a German bank, I'm just not sure if they'll take a Irish payslip as a proof of income. I guess some bank would. Otherwise you could release some equity if you have a property here.

The german mortgage rates are much more competitive though, for fixed interest anyway.
 
surely the german CGT would be far in excess of the irish CGT anyway, thus the liability here would be nil. eg Gain of 100K (yeah right:D ), german CGT of 40% (total guess here), German CGT of 40K. Irish liability of 20K less the 40K already paid, therefore nothing due here. Similar scenario for rental income. At least that's my limited understanding of it.
 
Hi Glenbhoy, not sure if it was already mentioned but if you hold a German proerty for over ten years the CGT on the sale goes to 0%. In the first ten years you are right, it is taxed similar to normal income.
 
Hi Glenbhoy/DarraghDog - YOu seem to be making assumptions about how the double-taxation treaties work. Personally, I'm not sure of the details of how these work out, but I wouldn't make an investment without getting professional advice on these matters.
 
You are definitely right there RainyDay, i am not sure on the actual workings of the agreement, although it is normally something along those lines, but people would'nt surely make investment decisions without professional advice would they ;) ? (if nothing else it makes it easier to sue your advisor)
 
I too am seriously interested in piling into Berlin. Been reading up a lot and have concluded that it appears to stack up. Still have one or two reservations. Principal reservation is how difficult is it to dispose of your investment. Whilst I appreciate in any western property market ( London/Dublin is what I'm familar with) it can still take some time to dispose of a property . Does anyone know how long the average property remains on a agents books in Berlin. Given that the entry costs are 10%+ you could take a heafty dig if you decide on coming out early. Does anyone know how negotiable the agents fees are ? seem a little heavy @ 6-7%.
 
I'm just back from Berlin and am looking for contacts (in Ireland) with expertise in German property law and tax law as it relates to Irish las. Has anyone got any suggestions?
 
What did you think of Berlin ? Did you get to look at any properties ? Was there value to be had. What was you negatives and positives ?
 
Hi Ronkav,

I recently got tax advice from one of the big four accounting firms re foreign property investment a different country in Western Europe. It was very expensive, but it did cover all the bases, and was money well spent.
They also put me in touch with a local english speaking law firm in the foreign country - again they were expensive but they did provide a very good service.

Did you go to Berlin through an agent or just have a look around yourself?

San Martino
 
No point in starting a new thread when this one is here!

I have a couple of questions, thoughts.

I'm seriously considering investing in a flat in Cologne. I intend living in Germany at some point in the future and if I had to I wouldn't mind living there at short notice, unlike property in Bulgaria etc. I am in it as a long term investment-I would not intend exiting at all so long as I can rent the place out-certainly won't exit before the 10 year CGT exemption is met (by which time I intend living in German and can actually take advantage of that tax code, assuming it's still in force!).

I regularly visit Cologne, the city always seems busy and vibrant, depressed economy or not. Anecdotaly I am told that the rental market is buoyant, with a steady stream of demand. The city is the home of Bayer (almost) and Ford. The German media is based in Cologne too, with a couple of big broadcasters residing there. I feel as confident in Cologne as any European city that I can afford to buy into.

So, here's my situation. I 'own' a house (my PPR) worth 300k and owe the bank 96k. I am going to have a chat with my mortgage advisor during the week just to make sure they'll even consider lending me an additional 140k or so. Is it likely that they will? I'm 27, single and my only debt is my mortgage.

Can anyone recommend an agency/advisor to talk to with knowledge of buying to let in Germany?
 
Hi,
I had looked into investing in a property syndicate buying into Germany, however an article in yesterdays business post (23rd Jan 06) states that Germany are considering introducing a 20% CGT from Jan '07, as it stands now if you hold the property for ten years you pay 0%. I'm sure this must have implications for anyone investing in Germany. Any thoughts?
 
Hi,


Question for the audience.

Does anyone know of a Wexford based German property based consultant who sources Commercial property in Berlin ?

Thanks
 
Before investing in Germany, one would have to question why so much money has been pulled out of various German property investment funds over the last 2 months.

"100 Million extracted last Friday alone out of one fund"

[FONT=arial,helvetica,univers]"Yet Deutsche Bank's decision to revalue its real estate funds was the result of a long-simmering problem. Germany's commercial-property market has been in a four-year slump, with rising vacancy rates and falling rents."[/FONT]

[broken link removed]

http://www.turkishpress.com/news.asp?id=104676
http://www.businessweek.com/magazine/content/06_02/b3966106.htm
 
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