At the end of 2026, the transitional provision in section 24 of the Land Acquisition Tax Act (GrEStG), which had been incorporated into that Act following the entry into force of the MoPeG, was due to expire. Section 24 of the GrEStG was intended to ensure, for a transitional period, that the preferential treatment provided for in Sections 5 and 6 of the GrEStG would continue to apply, even after the MoPeG came into force, to existing acquisitions and to new acquisitions, including, amongst others, between partners and a partnership or, conversely, between a partnership and its partners, which were completed by the end of the transitional period on 1 January 2027, even though, following the amendments introduced by the MoPeG, the partners in a partnership no longer hold a joint and several interest in the partnership’s assets, but the partnership itself is the owner of its assets (Section 713 of the German Civil Code (BGB)). With the so-called Secondary Market Credit Promotion Act (Federal Law Gazette 2023 I No. 411), the legislature had provided in Article 30 and Article 36(5) that Section 24 of the Real Estate Transfer Tax Act (GrEStG) is to be repealed with effect from 1 January 2027.
At the beginning of the year, the Federal Government proposed a draft of the ‘Ninth Act Amending the Tax Consultancy Act and Amending Further Tax Law Provisions’, which, in addition to the actual amendments to the Tax Consultancy Act, also provided for amendments to the GrEStG. However, according to the original draft, this only concerned amendments in so-called ‘signing-closing’ cases.
On the recommendation of the Bundestag’s Finance Committee (BT-Drs. 21/559), Article 11 was added to the draft bill, thereby repealing Article 30 and Article 36(5) of the Secondary Market Promotion Act. Consequently, Section 24 of the Real Estate Transfer Tax Act (GrEStG) will not be repealed with effect from 1 January 2027, but will remain in force indefinitely. The Bundestag has since adopted the Finance Committee’s recommendation in its second and third readings (Plenary Minutes 21/75, p. 8979).
This step is, in principle, to be welcomed. However, even the legislature had a different objective in mind when enacting the temporary transitional provision of Section 24 of the Real Estate Transfer Tax Act: the Real Estate Transfer Tax Act was to be completely amended and recast (see BT-Drs. 20/9782, p. 207). Proposals for a recast, and in particular for the harmonisation of the legal requirements for partnerships and companies, had already been drawn up in 2023 (draft for discussion by the Federal Ministry of Finance on a ‘Draft Act Amending the Real Estate Transfer Tax Act’). This objective appears to be receding into the distance following the extension of section 24 of the Property Transfer Tax Act (GrEStG) for an indefinite period.
Practical guidance:
In practical terms, this means that, even beyond 31 December 2026, there will still be structuring options under property acquisition tax law for property-related transactions between a partner and a partnership, or in the other scenarios governed by Sections 5, 6 of the GrEStG to avoid real estate transfer tax liability in whole or in part. The extent to which liability can be avoided and the means by which this can be achieved depend, of course, on the individual case.
Update dated 13 May 2026
Contrary to expectations, the draft bill was blocked by the Bundesrat. It did not grant the draft the necessary approval. However, this was due less to the property acquisition tax provisions than to the relief allowance for employees, amounting to 1,000.00 euros, which was also included in the draft bill. This is because the expected shortfall in income tax revenue was to be offset by an increase in tobacco duty. However, the revenue from tobacco duty would accrue solely to the federal government; local authorities and the federal states would receive nothing. The draft bill is currently before the Conciliation Committee. If the Conciliation Committee agrees on amendments to the draft bill, there is a possibility that the amended draft will be accepted by the Bundestag and the Bundesrat and enacted into law. It remains to be seen whether a compromise can be reached or whether, at the very least, the uncontroversial points of the draft can be taken forward.