Austrian Buyers' Info
Property Types in Austria
What are the buying options?
If you prefer not to rent your property, we are able to offer a small selection of properties that have a rare “second home” permission, which means you have no obligation to rent.
Some properties offer a fully managed rental service where the developer teams-up with a large tour operator who will efficiently handle all your rentals when you are not using your property and then pay you a quarterly or monthly income as well as handle all your bookkeeping. As an owner you simply book your forthcoming winter and summer dates in advance and the tour operator will do the rest… With fully managed properties sometimes the tour operator will offer a guaranteed rental return for a fixed period of time.
If you want to maximise the personal use of your property and are looking for complete flexibility, then a property with a flexible rental option is perfect. In this way you can either rent your property through a local tour operator, or rent privately. If you chose a tour operator, they will advertise your property, manage your online bookings, meet and greet your guests, and deal with the laundering and cleaning of your property when your guests have departed. If you chose to rent privately, you can make your own web site to advertise your property, or advertise on a holiday rental portal, of you can rent privately to friends and family.
Property Restrictions for Foreigners
Can EU Citizens purchase a holiday home in Austria?
Yes, EU citizens can buy a holiday property in any of Austria’s nine Provinces and the process is very straightforward.
Can Non-EU Citizens purchase a holiday home in Austria?
If you are a non-EU Citizen then there are restrictions on what you can buy. It is possible to buy a property with a ‘second home’ status, and although these properties are extremely rare to find, we have a selection on our web site to choose from.
It is not possible for non-EU citizens to buy in The Tyrol, Vorarlberg, or Salzburg Provinces. It is possible to buy in the Carinthia province however. To do this you would need to apply for a foreigner purchase permit, which usually takes a couple of months.
Alternatively, it is possible to buy in the name of an EU Company.
Purchase Process and Costs
What is the purchase process?
- The process of buying a property in Austria is very straightforward. The notary will act on behalf of both the purchaser and the vendor, he will draw up the deed of sale and all the documents required to transfer the legal ownership.
- When buying a property, both the purchaser and the vendor are required to attend the notary’s office to sign the deed of sale in his presence. Alternatively both parties can sign a power of attorney authorising one of the secretaries working in the notary’s office to sign the sales deed on their behalf. In this case the buyer will receive from the notary a copy of the deed of sale in German and a professional English translation along with a power of attorney (also in English) which authorises the notary’s secretary to sign on their behalf.
- The buyer will need to take the power of attorney to either a Notary Public (not a solicitor) in their country of residence to have their signature witnessed and (in the UK) the Notary Public will send the document off to the foreign office to have it ‘legalised’. Alternatively, documents can be signed and legalised at the same time if taken to the Austrian Embassy.
What are the purchase costs?
Purchase costs for buying a property in Austria work out about 6.6% of the gross purchase price. The purchaser will be required to pay the notary fees after the contract of sale has been signed.
Fees are calculated as follows:
- Purchase Tax ‘Stamp Duty’ – 3.5% of the gross price
- Registration in the Land Registry – 1.1% of gross price
- Notary’s fees – between 1.5 and 2% of gross price
- Court costs, administration fees – approx. 150 euros
What construction guarantees are there?
All new build Austrian property are covered by a 30 year building guarantee against all building defects, and developers will usually guarantee building fixtures for two years.
What are the payment structures?
New build properties are paid for in stages and all payments are made through the notary who acts as trustee for your money. The instalments are made into a client account and the payments for each stage are only released from the client account when an independent surveyor has inspected each stage and officially signed it off with the notary.
Purchase payments will typically be something like this:
- 15% at start of building works
- 35% on completion of the shell and roof
- 20% on completion of plumbing and electrical installations
- 12% on completion of the façade & windows
- 12% on completion of the property
- 4% on hand over of keys
- 2% after three years (or after developer providing a bank guarantee or insurance to the purchaser)
What is the construction schedule?
Construction in the Alps only takes place in the summer months, as during the winter months the ground is frozen and covered in snow. Because of this, Alpine developers optimise their build schedule and usually build and complete an apartment building or several chalets in one summer season.
The advantage to buyers is that during the winter they can sign their purchase contract to secure their property but will not have to start making stage payments until construction starts in the spring.
Should I take a mortgage?
If you intend to rent your property then there are tax advantages if you take a mortgage as you may offset the interest against rental income (which will no longer be permitted for UK property from April 2017). As your rental income will be in Euros you do not have any currency exposure if you intend paying your mortgage from rental income.
How much can I borrow?
Austrian banks will fund up to 60% of the purchase price and usually the loan period will be between 15 and 25 years. It is also possible to take fixed rate mortgages for 1 or 5 years.
What are the charges and interest rates?
Some banks charge a set-up fee and this is usually around 2% of the value of the loan. They will also charge an appraisal fee of 0.5% and you will need to pay the notary a fee of 1.5% of the amount of the mortgage to register the mortgage in the land registry.
Variable rates are around 3%.
Can I pay in pounds or dollars?
The property must be paid for in Euros.
The best way to transfer money from other currencies into Euros would be to use a dedicated foreign exchange broker. The benefit of working with a specialist foreign exchange partner is that they offer better rates than the main banks and, as they are specialists, they can advise you on buying currency forward.
We are happy to recommend a number of good foreign exchange brokers with whom we have worked for many years.
Buying in the Name of a Company
Can I purchase in the name of a company?
Yes, there are no restrictions in Austria if buying in the name of an EU company.
What are the benefits?
- Purchase a property with multiple partners – If you want to buy a property with more than two owners then buying in the name of a company is a good option.
- Tax-free ownership transfers – Ownership can be transferred tax free (to children or grandchildren, for example) by a transfer of shares.
What are the costs involved?
The set up costs for an EU company start at around €1,000 and you will be required to pay a yearly maintenance fee of around €800 as well as formalities such as holding an Annual General Meeting.
Rental Income and Running Costs
How much can I expect to receive in rental income?
Across the French, Swiss and Austrian Alps, rental yields tend to vary between 3 and 5% depending on a variety of factors such as the resort, the location of the property within resort (ski in, ski out properties demand a premium), the property itself and the facilities.
A common misconception is that if you buy a property in a dual season resort you will generate a greater rental income. While your property will certainly benefit from rental throughout the year rather than just over the winter months, properties in dual season resorts tend to generate a similar rental income to properties in resorts where winter is the main focus. The two main reasons for this are that rental rates are significantly lower in the summer season and many dual season resorts are at a lower altitude meaning they have a shorter winter season.
What are the annual running costs likely to be?
The expenses of a development of chalets or an apartment building are usually divided up proportionately between the owners, according to the size of their property.
As a rough guide the basic running costs for a property usually work out around 3-5 euros per m2/month and this would cover the cost of snow clearance, rubbish removal, water rates, building insurance, and local property taxes, cleaning and lighting for any communal areas, and maintenance of the gardens etc.
These expenses would not include your own personal usage of heating and electricity as this varies depending on how much you use the property.
If you buy a property with extensive leisure facilities such as swimming pools and spas then these costs could increase to around 7-11 per m2/month.
Do I have to rent my property?
Most holiday homes in Austria are obliged to be rented when their owners are not using them. This is because the tourism industry forms an important part of Austria’s economy accounting for over 15% of its GDP.
It is because of this important tourism industry that the Austrian government does not want owners of chalets to leave their properties empty for large parts of the year. Owners who do not live permanently in the mountains are encouraged to make sure that their property is regularly visited by holidaymakers as it is important for the local infrastructure of the villages to have a good flow of tourism.
Tax advantages - how do I get the VAT back?
Renting your new-build property can have tax advantages as it is possible to reclaim part, or all of the VAT on your purchase, giving a discount of up to 20%. To be eligible for this VAT discount you would be expected to rent your property professionally when you are not using it and you will need to show an overall profit over a period of 20 years.
You are permitted to claim back all the VAT - the full 20% - if you rent your property commercially and do not use it yourself. If you declare in advance that you will be using the property partly for your own private use then the amount of VAT you can reclaim depends on the ratio of personal use to rental use.
To reclaim the tax you will need to register for VAT, and in some cases pay the gross price and then claim the tax back. This usually takes two to three months and you will be appointed a tax advisor to help you with this. It is possible to obtain a bridging-loan for this if required, however in some of the property we sell this is not necessary as the developers will have pre-arranged everything for you so you will only need to pay the net price.
What taxes will I have to pay?
If you decide to take advantage of the VAT rebate and rent your property to holiday-makers you will be required to pay income tax on your rental income. Much of these taxes can be offset and there are a number of ways to reduce the tax you pay on your rental income.
For example, the interest you pay on your mortgage can be written off against rental income profits and you can also write off 10% of the costs of your furniture package as depreciation against your rental income.
If you rent your property to holiday-makers and pay the income tax for these rentals in Austria then there is an 11,000 euro income tax exemption per person per year, so if two people purchase a property together there is a tax free allowance of up to 22,000 euros per year. If you claim the VAT back on your purchase you will also be required to become VAT registered with the tax authorities for 20 years, but after this time you can de-register and will no longer be required to make annual tax returns. You will need to charge VAT at a rate of 10% on your rentals which can then be reclaimed each quarter upon the filing of accounts.
We always recommend a choice of local tax advisors to help with your tax returns. The tax advisor will charge a one off fee to set up your registration (please contact advisors directly for prices) and annual tax returns will cost in the region of 300 – 500 euros per year.
When you rent your property you will need to charge your guests tourism tax for the nights they spend in your property. These rate of tax varies from resort to resort but as a rough guide it is somewhere between 1 and 3 euros per night per person for each guest over the age of 14 years.
Capital Gains Tax:
The housing market in Austria has been subject to a number of controls in order to keep house prices within reach of locals, especially in the tourist areas. Capital Gains Tax of 30% will apply to any profits you have made on your property (effective since Jan 1, 2016).
Inheritance tax has been abolished in Austria (effective since August 1, 2008).
Investment and Selling
Is Austrian property a good investment?
Austria is fast becoming the intelligent investor’s business decision. Austrian property offers superb rental income potential for buyers, with one of the benefits being that it offers great dual seasonality with two high seasons in one year: winter for ski holidays, and summer for hiking, cycling and swimming in the warm lakes.
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