Holiday Properties - Taxes & Inheritance

From dream to real estate: Holiday properties have always been attractive, especially during times when holidays are becoming increasingly popular away from conventional hotel stays. However, it is important to keep an eye on costs despite all the enthusiasm. This begins with the incidental costs of the actual acquisition and can extend up to inheritance tax in case of inheritance.

In the following, we examine the costs that need to be taken into account for Austria, which may arise in case of acquisition of a property, on-going operations, for a sale, in case of a gift or in the event of inheritance.

Content overview

What costs do you incur when purchasing a holiday property?

First, the buyer of a property must bear the fee for entry in the Austrian land register (registration fee). This amounts to 1.1% of the purchase price. In addition, there is an additional 3.5% of the purchase price in real estate transfer tax, so that in any case 4.6% of the purchase price in fixed costs are incurred, regardless of whether it is a holiday property or not. Although the real estate transfer tax is to be paid by the buyer, both the buyer and the seller are liable for its timely payment under the law. For transfers between family members, lower tax rates or assessment bases apply in connection with the land transfer tax. Furthermore, there are exceptions (in the sense of other assessment bases or tax rates) for forestry and agricultural land.

In addition, there are solicitor or notary costs for the creation of the purchase contract, the costs for the notarial certification of the purchase contract documents and any broker commission. General statements about the amount of these costs cannot be made, since these can vary from individual case to individual case. As a general guide, when acquiring a property in Austria, one must expect at least ancillary costs in the amount of 10% of the purchase price.

What operating costs need to be paid by the owner of a holiday property?

Especially in the case of a holiday property, on-going costs in the form of a secondary residence or tourism tax can be incurred. In this case, the legal situation varies depending on the federal state. Depending on the federal state (and partly also depending on the respective municipality), the amount of this levy ranges from a few EUR 100 per year up to EUR 2,200 per year (for example in Tyrol).

In addition, the current costs that each property owner incurs must also be taken into account: operating costs, property tax, insurance, etc.

What costs are incurred when selling a holiday property?

In the case of the sale of a holiday property in Austria, the seller may have to pay real estate gains tax. This is fundamentally 30%, calculated on the seller's profit on the sale of the property (sale of properties acquired before 31/03/2002 are subject to an effective tax burden in the amount of 4.2% of the sales proceeds). There are some exceptions to the real estate income tax, e.g. if the property was used as the main residence for a certain number of years (thus not in the case of mere second or leisure residences) or the building itself was built by the owner (which is subject to tax on the sale of land and property in the latter case). It should also be noted that in the event of the sale, a valid energy certificate must be handed over to the buyer by the seller.

What costs apply when making a lifetime gift?

There is no gift tax in Austria (currently). Nevertheless, the 1.1% registration fee (calculated based on the market value or in the "expanded family circle") and the land transfer tax is also due here for entry in the land register. In the case of donations up to a value of EUR 250,000, the latter is 0.5%, for the following EUR 150,000 2% and in addition the regular tax rate of 3.5% (level tariff). The assessment basis for the real estate transfer tax in the case of gifts is the property value, which can be determined in three different ways (flat-rate value method, real estate price comparison list or expert opinion).

The variable costs for the solicitor and/or the notary are of course also incurred in the case of donations.

What costs are incurred in the event of inheritance?

Since 2008, there has been no inheritance tax in Austria any more. Since the acquisition due to death is a free acquisition, the land acquisition tax is also to be calculated here based on the tiered tariff and based on the property value (see item 4 above). The 1.1% registration fee for the land register entry is also incurred.

In addition, in the context of the estate procedure, there are still costs such as the fee for the notary as a court commissioner, 5 percent of the court fee on the pure estate assets and any costs of an expert valuation.

Autor: Oskar Takacs