Guide to Buying Property in Austria
Overview
The Austrian Property Market
In considering an overview of real estate
in Austria, the most striking fact associated with real property in that country
is the fact that overall the costs associated with
property in Austria is higher than any other country in Europe. In addition,
the cost of living in Austria generally is higher than any other country in Europe
at the present time.
With this in mind, it is also important to note that the tax rate in Austria when
it comes to the buying and selling of real estate in that country also runs rather
high. For example, any capital gains that are experienced on the sale of real estate
is taxed in Austria as regular income at the significant rate of 34%. There are
exceptions to this taxation. First of all, a piece of real estate that is used as
a primary residence is exempt from this tax. Additionally, all real estate that
is held for ten yours or more is exempt from this taxation as well. Therefore, many
people, including foreign nationals, hold on to investment real estate for at least
ten years before turning around and selling the property for a profit.
Historically, Germans have been the primary group of foreign nationals that have
taken to purchasing real estate in Austria.
Investment Property in Austria
As will be discussed in greater detail later, foreign nationals have a history of
investing in real estate in Austria. In recent years, significant steps have been
taken and made to streamline and simplify the manner in which foreign nationals
can invest in Austrian property. This particular is true when it comes to
foreign nationals from the countries that make up the European Union.
A foreign national that is interested in investing in real estate in Austria needs
to keep in mind that the cost of real estate in that country is higher than in any
other country in Europe. Thus, for the most part, individuals who find themselves
investing in real estate in Austria tend to be a bit better heeled and tend to have
a higher amount of disposable income.
The tax implications of buying and selling real estate in Austria also need to be
kept in mind when it comes to a foreign national making an investment in real estate
in that country. These implications are set forth and discussed previously .
Residential Real Estate in Austria - Single Family Properties
Foreign nationals do make the purchase of single family residences and dwellings
in Austria with some regularity. Far and above, the greatest number of foreign nationals
who are purchasing single family residences in Austria are Germans. Italians are
coming in at second place with citizens from other EU nations coming in rather far
behind. Of course, there are some people from other nations that are also making
the purchase of single family homes in Austria.
Most people who are foreign nationals who are purchasing real estate in Austria
are doing to to establish second homes. For the most part, these homes are being
used as retreats and for holiday purposes.
Residential Real Estate in Austria - Apartments
Some foreign nationals have taken to purchasing apartments in various locations throughout
the country of Austria. For the most part, these foreign nationals are purchasing
these apartments in the more urban areas in the country. In addition, some foreign
nationals are found to be purchasing apartments in some of the resort communities
in that country.
Apartments in Austria do not necessarily come cheaply. Indeed, as has been
referenced elsewhere, the costs associated with real estate in Austria tends to
run far higher than what is found in other countries around the world .
Holiday Property in Austria
Austria is a prime vacation spot in the European community in this day and age. Indeed,
Austria has been a haven for travelers and tourists for many, many years. With this
in mind, a goodly share of the real estate that is trading on the marketplace at
this point in time involves property that is intended for vacation and holiday purposes.
Many foreign nationals who are purchasing vacation or holiday property in Austria
actually are finding these purchases to be rather lucrative. For example, these
foreign nationals are buying real estate -- purchasing vacation properties -- that
they then utilize in part for their own holiday purposes. However, in addition to
using these properties for their own personal holiday purposes, many foreign nationals
have commenced the practice of renting or leasing these properties to other people.
It is this letting process that has proven profitable over the course of the past
couple of decades for an ever growing number of foreign nationals.
Most real estate experts who have spent any time analyzing and considering the property
market in Austria have concluded that this trend will continue well into the future.
Because buying and then renting vacation property has proven to be a solid and profitable
investment for so many people, even more foreign nationals are attracted to such
real property ownership all of the time. This factor, coupled with the tax benefits
to be realized by holding onto real estate for a period of at least ten years, has
rendered these investments truly sought after at this point in time.
Austrian Mortgages Options
When considering the options for a mortgage on your overseas property there are a
couple of choices to consider:
- Do you consider raising finance on your existing property in the UK to cover the
whole cost of your purchase abroad? A good idea if the interest rate in the country
in question is a lot higher than it is here in the UK as you will pay a lot less
in monthly repayments.
- Do you secure a mortgage against the property from a local bank in the country of
purchase? This can be a wise option especially if the interest rate is lower than
our current UK interest rate. Most overseas mortgage / bank lenders will require
upto 30% deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are not living
or earning in that country as you may well lose out on exchanging money each time
to cover monthly expenses. Check out our
Foreign Currency page to see how you can save money in this example
- Some Builders and developers may well offer their own mortgage facilities on their
properties for sale. This can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare with the two options
above before making your final descision.
For more details on Mortgages in
Austria visit our Mortgage page in the Austria section.
Specific steps to Buying Real Estate Property in Austria
There are some restrictions on the manner in which foreign nationals can purchase
and possess real estate 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
real estate in the country. However, in recent years, there has been a general relaxation
in regard to the laws that govern foreign ownership of real estate in Austria.
The most significant changes and relaxations in the laws governing foreign ownership
of real estate pertain to foreign nationals from the European Union nations. Simply,
since the formation of the EU and since Austria's reception into the EU, any foreign
national within the EU can purchase real estate in Austria with ease. Indeed, for
all practical purposes, at this juncture, a citizen from the EU stands in essentially
the same position that a citizen of Austria stands when it comes to the purchase
and ownership of real estate in that country.
When it comes to foreign nationals from non-EU nations, there remains one rather
significant restriction on the ability of these foreigners to buy and own real estate
in Austria. In short, before a foreign national from an non-EU can purchase real
estate 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.
Generally speaking, approval from the local authority is easy to come by and will
be granted in the vast majority of instances. Additionally, this approval normally
is forthcoming in a very short amount of time.
Once a foreign national has identified a piece of real estate that he or she is
interested in purchasing, an oral offer is made to the seller. If the seller accepts
the offer -- or, if the seller puts forth a counteroffer that is acceptable as such
to the buyer -- a purchase agreement is prepared. In Austria, more often than not,
a solicitor or lawyer handles the affairs associated with the buying and selling
or real estate.
As a matter of normal routine, the buyer will post a deposit in the amount of 10%
at the time the purchase agreement is executed. The deposit will be held in escrow,
pending the completing of the sales transaction itself. If the sale falls apart
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 encumbrances that might interfere or impede the conveyance of the
real estate to the buyer.
At the time of the completion date, the buyer will need to have his or her financing
in place and in order. 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 real estate will transfer by operation of
Austrian law to the buyer. However, the new ownership of the real estate -- the
ownership of the buyer in the real property -- will need to be registered with the
Austrian Land Registry.
The process of fully registering the real estate with Austrian Lad Registry can
take up to three or four months in some instances. It is not a quick process, more
often than not.
When it comes to obtaining financing for the purchase of real estate in Austria,
Austrian banks generally will lend money to citizens of that country and foreign
nationals alike.
Property Abroad always recommends using a
Solicitor or Lawyer
Help others to find this article:
Further Reading on Austria