Real Estate ABC
Important real estate terms from A to Z
depreciationDepreciation is a tax term. It describes the annual decrease in the value of a building due to wear and tear or aging. For rented properties, this amount can be claimed for tax purposes over several years, which can significantly reduce the tax burden. Important: Only the building, not the land, is depreciable.
Old building: A building constructed before a certain time (e.g., before 1949). Old buildings are often characterized by high ceilings, wooden floors, and distinctive architecture. However, renovation can be costly.
Abandonment: The legal agreement between buyer and seller that ownership of a property is to be transferred. This is a prerequisite for the transfer of ownership in the land register and is usually declared at the notary appointment.
Allocation plan: A graphic representation of how a building is divided into individual units (e.g., apartments, basements, garages). The plan is part of the declaration of division for condominiums.
Building load: A public-law obligation of a property owner to tolerate or refrain from certain things—e.g., a right of way for neighbors or a building boundary. It is recorded in the register of building encumbrances.
land value: Average location value for properties in a specific area, based on actual purchase prices. It serves as a guide for valuation, but is not a fixed market price.
property developerA property developer plans, builds, and sells real estate at their own risk. Buyers usually sign the contract before or during the construction phase. The advantage: "Everything from a single source."
Loan-to-value ratio: The collateral value of a property determined by banks, on the basis of which a loan is granted. It is usually below the market value and serves to minimize the bank's risk.
Brokerage fee: The broker's commission, which is due upon successful brokerage of a property. In many German states, it is split between the buyer and seller.
Cash flowCash flow: The monthly or annual amount remaining from a property after all ongoing costs (e.g., mortgage, maintenance, maintenance fees) have been deducted. Positive cash flow means the property generates profit.
Property purchase checklist: A helpful list of points that should be checked when buying: building structure, location, neighborhood, land register extract, energy certificate, contaminated sites, maintenance reserve (for condominiums), etc.
loan: A loan taken out to finance real estate. Important components include interest rate, repayment, term, and fixed interest rate.
listed property: A building that is listed as a historical monument. Renovation must be carried out under certain conditions, but can be particularly tax-efficient (renovation costs can be written off over several years).
semi-detached house: A single-family home that shares a common wall with another house of the same construction. Usually cheaper than a detached house, but with more privacy than an apartment.
Easement: A right of use registered in the land register for the benefit of third parties, such as a right of way, right of way, or right of residence. It can affect the value of a property.
Energy certificate: A mandatory document when selling or renting a property. It provides information about the building's energy performance – from A+ (very efficient) to H (less efficient). Consumption and energy demand certificates are available.
Equity capital: Your own money that is contributed to the financing. The higher the equity, the more favorable the loan terms. 20–30 percent of the purchase price is considered reasonable.
Leasehold: Instead of buying the land, you pay the owner (often the church or municipality) a regular ground rent for use over a long period of time (e.g. 99 years).
Development costs: Fees for connecting a property to the public infrastructure – i.e. water, electricity, sewage, roads, etc. These are often incurred when new buildings are constructed.
parcel: A surveyed portion of the earth's surface with its own parcel number in the land register. It represents the smallest recordable unit in the land register.
financing: Real estate financing consists of equity and debt. In addition to traditional annuity loans, there are also models with KfW funding or variable interest rates.
prefabricated house: An industrially prefabricated house that is assembled on site. Advantages: quick construction time, predictable costs. Disadvantages: less customization.
half-timbered house: A traditional building with a visible wooden framework. It is particularly common in historic old towns and is often listed as a historical monument.
land register: A public register in which all real estate and its legal status are recorded. It provides information about owners, encumbrances (e.g., mortgages), and third-party rights.
Property: A demarcated portion of the earth's surface recorded in the land register and cadastre. It may be built-up or undeveloped.
Real estate transfer tax: A tax levied on the purchase of land or real estate. It varies between 3.5% and 6.5% of the purchase price, depending on the state.
mortgage: A lien registered in the land register that serves as security for a loan. Unlike a mortgage, it is not tied to a specific claim and remains in effect until it is canceled.
House fee: Monthly advance payment by owners in a homeowners association to cover operating costs, maintenance and administration.
mortgage: A mortgage that serves as security for a loan. Unlike a land charge, it is tied to a specific claim and decreases with repayment.
main residence: The apartment primarily used by the owner or tenant. Important, for example, for tax or registration issues.
Heating Cost Ordinance: Legal regulation on how heating costs within a building must be passed on to the users – usually based on consumption.
Maintenance reserve: Establishment of reserves for future repairs and maintenance of common property in a condominium association. The amount and use are decided at the owners' meeting.
Real estate valuation: Methods for determining the value of a property. A distinction is made between the comparative value method, the income value method, and the asset value method.
Index rent: A rent that is based on a price index (usually the consumer price index) and is automatically adjusted for inflation.
Investment costs: Costs incurred for the acquisition or improvement of a property – e.g. purchase price, notary, broker, modernizations.
Annual statement: A document that lists all income and expenses for a year within a homeowners' association. It serves as the basis for the utility bill.
Annual gross rent: The gross rental income of a property without additional costs. An important key figure for determining value.
Art Nouveau house: Building dating from around 1900 with an ornate facade design. Popular with lovers of historical architecture.
Investment: The purchase of a property for rental purposes with the aim of building wealth or generating income.
Cadastre: Public register in which properties are recorded with size, location and use – often linked to the land register.
Purchase price allocation: The separation of the purchase price into building and land portions – important for depreciation.
Cold rent: The rent excluding additional costs. Basis for calculating net rental income.
Site plan: Representation of a property in relation to neighboring properties and public rights of way – important for building applications.
property: Synonym for land or property – especially used in cadastral matters.
Duration: The length of time a loan takes to fully repay. This affects the interest rate and monthly payment.
discharge of encumbrances: Notarized declaration that existing mortgages will be cancelled upon purchase.
brokerage agreement: Agreement between owner and agent regarding the brokerage of a property.
rental yield: Ratio of annual rent to purchase price. A measure of the profitability of a property.
Rent index: Overview of local comparative rents – helps with rent negotiations.
modernization: Structural measures to improve the building – e.g. new windows or heating system.
notary: A lawyer who legally certifies the real estate purchase contract. Without a notary, a purchase is not legally binding.
extra costs: Operating costs such as water, garbage or caretaker – in addition to the basic rent.
Usable area: Area that is not used for residential purposes – e.g. cellars, storage rooms or technical rooms.
Refinancing: If the initial financing is insufficient, additional credit may be necessary.
Property description: Detailed description of a property in the exposé – with information on location, furnishings and condition.
Local rent: Average rent for comparable apartments in the same location – basis for rent adjustments.
Off-market property: Property that is not publicly advertised – often sold through exclusive networks.
commission: Another name for brokerage – brokerage fee for a successful sale.
penthouse: Apartment on the top floor with exclusive furnishings and roof terrace.
Pre-Check: Initial review of financing options or creditworthiness before purchasing property.
Lease agreement: Contract for the use of a property with income – e.g. in the catering or agricultural sectors.
Price per square meter: Price per square meter of living or usable space – important for comparing properties.
Quality assurance: Measures to ensure construction quality – e.g. through construction supervision or experts.
Quota system: Regulation for the distribution of costs in a community of owners, usually according to co-ownership shares.
remaining debt: The outstanding amount of a real estate loan.
reserves: Capital saved for future expenses, e.g., maintenance.
Return: Relationship between profit and capital employed – in real estate usually rental yield.
renovation: Beautification measures such as painting or replacing flooring.
special property: Ownership of a specific unit – e.g., an apartment in an apartment building.
Asset valuation method: Valuation method for owner-occupied properties.
speculation tax: Tax on profit from the sale of a property if the speculation period (10 years) has not been observed.
Renovation: Measures to restore the building structure.
Declaration of division: Notarial deed that regulates how a building is divided into ownership units.
Repayment: Repayment of the loan taken out.
Tipster commission: Compensation for referrals to potential buyers or sellers.
TÜV report: Inspection by independent experts to assess the condition of the building.
Usable space: The volume of a building enclosed by walls and roof.
Repurposing: Change of use – e.g. from office to living space.
Document review: Review all relevant documents before purchase.
Certificate of non-objection: Confirmation from the tax office that the property transfer tax has been paid – prerequisite for entry in the land register.
Market value: Market value of a property under normal conditions.
Full financing: Financing without equity – only makes sense under certain conditions.
administrator: Responsible for the administration of condominium associations.
Pre-emption right: Right to purchase a property before it is transferred to a third party.
Living space: Area used for residential purposes – e.g. living room, bedroom.
Right of residence: Registered right to use a property or parts of it.
Condominium Act (WEG): Legal basis for condominiums.
Valuation report: Report on the market value of a property.
X-Factor Real Estate: Special features that make a property unique – e.g. historical history, unusual architecture or exclusive location.
Yield: English term for return – ratio of income to invested capital.
foreclosure auction: Legal proceedings for the realization of a property in the event of default.
interest rate: Cost of the loan – depending on creditworthiness, equity and term.
Interim financing: Short-term loan until the final real estate financing.
fixed-term rental agreement: Rental agreement with a fixed end date – often for limited use.