What is the purpose of a clearance certificate when buying real estate?

When purchasing a piece of real estate, several permits and confirmations are necessary so that the new owner can be entered into the land register. The tax clearance certificate (also known as a tax compliance certificate) is one of them. It is issued by the tax office and must be submitted to the land registry office. The tax clearance certificate also plays an important role in real estate financing. Forced sales and property exchanges must also be reported to the tax office. Thus, the tax clearance certificate is indispensable in connection with a change of ownership.

What is the purpose of the clearance certificate

When buying real estate, the so-called Real estate transfer tax which, together with the notary fees, are among the additional purchase costs counts. After the notarization of the real estate purchase agreement, the notary must send a copy of the Purchase agreement send to the tax office. The notice of alienation must be submitted within two weeks after conclusion of the purchase agreement be carried out by the notary public. The tax office will issue a corresponding Tax assessment notice create and transmit to the buyer of the plot. The real estate transfer tax is therefore billed to the buyer by the tax office and must be paid before the property is transferred. The amount of the real estate transfer tax varies depending on the federal state, and there is plenty of discussion about the level of taxation.

The Certificate of clearance confirms that the real estate transfer tax has been paid in full and thus nothing stands in the way of the buyer's entry in the land register. The land register entry is therefore dependent on the payment of the real estate transfer tax in accordance with the Real Estate Transfer Tax Act (§ 22 GrEStG). By combining the clearance certificate and the transfer of ownership the payment of the real estate transfer tax is secured. The tax office issues the clearance certificate in a German-English version.

If multiple buyers are listed in the real estate purchase agreement, each buyer will receive a real estate transfer tax assessment for their fractional purchase. Liability for the real estate transfer tax toward the tax office rests with both the buyer and the seller. Both contracting parties are advised of this during the notarization.

With the entry of the property buyer in the land register, the purchase process is completed. and the buyer is legally the new owner of the property. The entries are made by the land registry office.

Certificate of clearance and property financing

If the property is financed by a bank, the Certificate of good standing is also of great importance to the lender. So that the bank disburses the loan and the land charge into Land Register is registered, financial institutions usually demand the tax clearance certificate from the tax office. Ultimately, this is closely linked to the full payment of the purchase price to the seller. Anyone who wants to acquire real estate must pay the real estate transfer tax and it is permitted no tax arrears or other tax debts to be proven.

FAQ – Frequently Asked Questions by Property Sellers and Buyers

What happens if the real estate buyer does not pay the property transfer tax?

Anyone who purchases real estate is faced with the obligation to pay property transfer tax. If the buyer does not pay the property transfer tax, the tax office will not issue a clearance certificate (tax clearance certificate). Consequently, the buyer will not be entered in the land register and thus cannot become the property owner. The tax office is authorized to demand the due amount from the seller. The seller can demand the real estate transfer tax from the buyer. and via legal means a sue for damages, because the buyer has breached their contractual obligations. If the purchaser also fails to pay the purchase price, the unwinding of the purchase contract can be initiated. Then the already transmitted Tax claim cancelled. To avoid such inconveniences and delays in real estate sales, the Financing of the property secured before the notary appointment to be.

Where can I turn if I have general questions about the certificate of good standing?

If you have any further general questions about the clearance certificate, you, as a consumer, can first contact the relevant public authority. There you will receive free information and can thus avoid unnecessary delays when buying a house or apartment. Here are the contact details of the responsible office in Munich:

Municipal Treasury and Tax Office
Herzog-Wilhelm-Straße 11, 80331 Munich

Phone: 089 233-27824 or 089 233-27822
Fax: 089 233-26092

Mailing address:
State Capital of Munich
Municipal Treasury
Treasury and Tax Office
Postfach 201951
80019 Munich

Phone consultation:
Monday to Thursday: 8:30 a.m. to 12:00 p.m. and 1:00 p.m. to 3:00 p.m.
Friday: 8:30 a.m. to 12:00 p.m.

Personal consultation:
Monday to Friday: 8:30 a.m. to 12:00 p.m. and by appointment

However, do not hesitate to ask your notary about the tax clearance certificate. He is very familiar with the procedures involved in the transfer of ownership and can also provide you with targeted advice. Real estate purchases involve many formalities, and all certificates must be available for the property acquisition to be completed.