# Bavaria > Bavaria is Germany's largest state by area and has the lowest property transfer tax rate in the country at 3.5%. Canonical: https://www.investbud.de/en/states/bayern Last updated: 2026-10-28 Bavaria is the only German state that still applies the 3.5% property transfer tax rate set in federal law. That keeps acquisition costs below those in every other state. At the end of 2025 about 13.2 million people lived in Bavaria, and with a GDP of 824 billion euros (2025) it has the second-largest economy of the German states after North Rhine-Westphalia. The market runs from Munich to cities such as Nürnberg, Augsburg, Regensburg and Würzburg. You can see purchase prices, rents and gross yield for Bavaria in the live figures at the top of this page. - Transfer Tax: 3.5% - Capital: München - Population: 13,2 million - Area: 70.550 km² - Lowest transfer tax rate in Germany (3.5%) - About 13.2 million inhabitants at the end of 2025 - Second-largest economy of the states after North Rhine-Westphalia - Lowest unemployment rate of all German states ## Real Estate Market Major industries in Bavaria include the car industry, technology, aerospace and tourism. Munich is Germany's most expensive housing market. Nürnberg has much lower purchase prices. In September 2026 Bavaria had the lowest unemployment rate of all German states, at 4.2%. - BMW, Siemens and Allianz have their headquarters in Munich - Nürnberg has much lower purchase prices than Munich and an above-average share of industrial employment - The Alps and lakes draw holidaymakers. Check the local rules on holiday letting before you buy a vacation rental ## Transfer Tax Details Bavaria levies a Grunderwerbsteuer of 3.5%, the lowest rate in Germany. Brandenburg, North Rhine-Westphalia, Saarland and Schleswig-Holstein charge 6.5%. On a 500,000 euro property you pay 17,500 euros in transfer tax in Bavaria, compared with 32,500 euros in Brandenburg or Schleswig-Holstein. The 15,000 euro difference lowers your acquisition costs and the equity you need for the purchase. ## Investment Cities Besides Munich, several Bavarian cities have markets of their own, with different prices and tenants. - Munich: Germany's most expensive market; gross yields are among the lowest in Germany - Nürnberg: Bavaria's second-largest city and the largest in Franconia, with several universities and much lower purchase prices than Munich - Augsburg: Bavaria's third-largest city, with a university - Regensburg: The old town is a UNESCO World Heritage site; the city has a university ## Practical Tips - Compare total acquisition costs in Bavaria with those in states that charge a higher transfer tax. At the same purchase price you save three percentage points against a 6.5% state - Nürnberg has lower purchase prices and a higher gross yield than Munich. Compare the live figures before you settle on a city ## Frequently Asked Questions ### Why does Bavaria have the lowest transfer tax in Germany? Since the 2006 federalism reform, the states may set the rate themselves. Bavaria has not done so, so the 3.5% rate from § 11 of the Grunderwerbsteuergesetz still applies there. Every other state has raised its rate to between 5.0% and 6.5%. ### Is Munich too expensive for property investment? Munich has the highest purchase prices in Germany, so its gross rental yield is lower than in almost any other large city. You can see the current figures at the top of this page. If a higher yield matters to you, compare surrounding municipalities and other Bavarian cities. ### What are the best areas for rental investment in Bavaria? If yield matters to you, compare Nürnberg: purchase prices there are well below Munich and the gross yield is higher. In cities such as Augsburg, Würzburg, Erlangen or Regensburg, check the yield of each apartment with a realistic net rent and all costs.