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One of the particular features of buying property in Austria is that fact the the ancillary costs in relation to the purchase are pretty high – apparently among the highest in Europe, with ancillary costs when buying property in Austria being around 10-11% of the purchase price (e.g. on a property costing EUR 250,000 between EUR 25,000 and EUR 27,500).
[wpex more=”Ancillary Costs” less=”Ancillary Costs”]The brunt of the ancillary costs are split between Grunderwerbsteuer (3.5% of purchase price) and Commission of 3.6% commission – the only way around it being to conduct a private sale without using a Makler. The commission is not negotiable. Entry into the land register costs an additional 1% (the process often takes 3-4 months to complete), while a further 1% goes on notary costs – mainly in relation to the signing of the purchase contract and the land registry. In the event that a sworn translation is required for the contract, or the services of a court sworn interpreter for the negotiations then there are additional costs for that. Non-EU citizens will also require permission to make the purchase from the local authority to do so – although this has widely become a formality provided that there are no financial reasons for the purchase to be opposed.[/wpex]
[wpex more=”Ongoing Costs” less=”Ongoing Costs”]In addition to the one-off costs, which are due from the outset, there are also annual property taxes – although these are relatively low in comparison with the ancillary costs, as well as property insurance. If taking out a mortgage, one of the conditions may often be that a life insurance policy is taken out to cover the eventuality of the borrower dying before the mortgage has been repaid. Generally mortgages run for 20 to 30 year terms, although there is a tendency to often shorter term mortgages to older purchasers. There are usually fees relating to the mortgage application to be paid to the bank granting the mortgage. When it comes to obtaining financing for the purchase of property in Austria, Austrian banks generally will lend money to Austrian citizens and foreign nationals alike. Electricity and gas bills may be between EUR 80-150 per month for an average-sized flat (75m2). In addition, if you live in a flat within a residential block, there will also be costs for the house management company and contributions for drainage, refuse collection, water and chimney sweeping as well as contribution to the property repair fund.[/wpex]
[wpex more=”Costs of Selling Property” less=”Costs of Selling Property”]On the selling side there is also the fact that the capital gains tax on the realised proceeds are taxed as regular income, although there is an exemption for primary residences, and previously property held for over ten years was also exempted from this. Consequently, speculation on property held for investment purposes is less widespread than in other countries.[/wpex]
[wpex more=”Restrictions on Purchases by Foreign Nationals” less=”Restrictions on Purchases by Foreign Nationals”]There are some restrictions on the manner in which foreign nationals can purchase and own property in Austria. Indeed, historically there were some more significant steps that a foreign national had to undertake in order to be able to buy and own property in the country. However, in recent years, there has been a general relaxation in regard to the laws that govern foreign ownership of property in Austria, so that EU citizens have practically identical rights.
When it comes to foreign nationals from non-EU nations, there is one rather significant restriction on the ability of these foreigners to buy and own property in Austria. In short, before a foreign national from a non-EU country can purchase property in Austria, that person must obtain permission from the local authority office in the locality in which the foreign national desires to make the purchase of real estate.[/wpex]
[wpex more=”The Purchase Process” less=”The Purchase Process”]Once you have found a property, you’re interested in purchasing, you first make an oral offer to the seller. If the seller accepts the offer, or makes a counter-offer that the interested purchaser finds acceptable, a purchase agreement is prepared. When purchasing property in Austria it is sold ‘as seen’ and as you are committed to the contract from the moment that you sign the offer document – so you should have thoroughly investigated both the property and surrounding area before submitting your offer, although it is not usual for a survey to be conducted. In Austria, more often than not, a solicitor or lawyer (Notar) handles the affairs associated with the buying and selling.
As a matter of normal routine, the buyer will pay a deposit in the amount of 10% at the time the purchase agreement is executed. The deposit will be held in escrow (in a Treuhandkonto), pending the completion of the sale. If the sale falls through, through no fault of the buyer, the buyer will have his or her deposit returned. When the completion date rolls around, the seller will be responsible for making certain that all contract provisions that apply to him or her have been satisfied. More often than not this primarily includes making certain that the property is free from any issues that might impede the conveyance of the real estate to the buyer.
The buyer will need to have the financing in place and in order by the time of completion. At the time set for the completion of the transaction, the buyer will pay the remaining balance due and owing on the purchase agreement. Once this payment is made, ownership of the property will transfer to the buyer. However, the new ownership of the property will need to be registered with the Austrian Land Registry, this again is done by the Notar.[/wpex]