My name is Ake and I looking for some mentorship in Berlin real estate market. In a year time, I am planning to purchase an apartment in Berlin and work full-time in an architecture office. However, staying in Berlin is not my priority and the goal is the investment I am making. The goal is to buy an apartment (preferably in a poor (cosmetic) condition) , refurbish it during my stay in there, get some external help if needed (I don't mind spending time in a messy environment) and sell it for profit.
Ive done some research regarding the current state of Berlin's real estate market and found out that this approach might save me some money in Capital gains tax, because I would live in the house I am selling. However, I also know that Berlin is famous for its rented space and that most of property is rented rather than owned.
The question is, if this approach makes sense in current Berlin market? Or is Berlin not the right city for that? Or may be there are other way of approaching this goal? Is my capital gains tax correct? Or did I make a mistake.
Would be great to hear from some professionals. In fact, if there is anyone in Berlin now, would be great to meet for a chat!
Hi Ake, I see this post is a bit old, but my understanding is that in Berlin you won't be liable for capital gains tax if you live in it for two years, or if you don't live in it but own it for 10 years (I think either 25% or your marginal tax rate if lower).
I think the main issues for live and flip are the large transfer costs in Berlin, up to 15%. You would need to assume that your live and flip would make well over the transfer cost in a short period of time to justify it. A lot of people are speculating that Berlin is coming to the end of a bubble, so could be considered a bit speculative depending on how much you have to pay for those transfer costs.
I personally am going for a buy-and-hold strategy in Berlin. I like the medium-to-long term outlook for Berlin, and just plan to ensure that my purchases are cash flow positive to ride out any short term volatility (not easy at the moment in Berlin, but I think possible with a bit of creativity).
@Hugues Armand-Delille is organising a get together of people in Berlin at https://www.biggerpockets.com/forums/25/topics/398.... I recommend you follow that discussion.
Your strategy is house hacking/ living flip makes sens in berlin.
the only hurdles I can see are:
1 you capacity to identify a good deal
2 Compliance to the mileuschutz rules if the building is located in them.
3 Your own construction skills or the skills and cost of getting external help.
4 your sellings skills. It’s not because you do a great job that you will sell it well. In fact many owners get emotional about selling there « baby ».
I’d be happy to have you at the meet up Sunday 4pm. We are having some beers at my place in moabit.
Let me know.