Updated on 7/6/2022
Real Estate Purchase Essentials
For some time now, real estate has enjoyed great popularity as a capital investment, since living is an essential basic need of every human being and it is usually a stable, valuable investment.
In the following article we will therefore examine the essential legal aspects in connection with the purchase of a property (land, house, condominium, etc.).
The first step, which is particularly relevant from a legal point of view - after a possible inspection of the desired property - is usually the submission of a purchase offer to the seller. In principle, a purchase offer is to be classified as a legally binding declaration; in the event of withdrawal, claims for damages may be threatened. Contrary to the pre-formulated ("stencil-like") patterns frequently encountered in practice by estate agents, it is recommended to use a specially designed purchase offer. This is because it often lacks essential aspects for buyers.
In any case, a purchase offer should reflect the following points: Purchase price (including taxes), handling of possible encumbrances and inventory, bearing of costs, possible brokerage fees, timing and procedure, time limit, possible conditions (financing commitment by bank, necessary official approvals).
The purchase of a property in Austria requires a written contract so that the ownership can be registered in the land register. The written contract ensures that all agreements are clearly and unambiguously recorded. In addition, the contract must be certified by a court or notary; i.e. the authenticity of the signatures of the contracting parties under the contract is established by the court or a notary.
In principle, the seller and buyer are free to draw up the purchase contract themselves. However, it is advisable to have the contract of sale drawn up by a specialist lawyer for a number of reasons. There is a general need for clarification regarding the specific rights and obligations of the buyer and seller, such as warranty commitments, modalities of processing and handing over the apartment, tax aspects, burdens, etc.
An essential cornerstone of a fiduciary processing of real estate purchases is the security function in the outward and inward lick on purchase price and transfer of ownership. Lawyers are obliged to act on their own responsibility in a trusteeship which they have taken over and, as a rule, to handle trusts with a trust deposit of more than EUR 40,000 or, if a security in a trust is required by law, through a trust institution managed by the competent bar association.
The lawyer acting as trustee opens his own trust account, which also enjoys insurance protection. The purchase price is paid into this account by the buyer or a bank that may be financing the purchase. A payment of the purchase price (with deduction of real estate income tax and other fees) is generally made after the trust conditions stipulated in the purchase agreement have been fulfilled, in particular the registration of the ownership title in the land register.
Tip: The trust order to the lawyer may already be included in the purchase contract. It is not necessary to conclude a separate trust agreement.
Tip: The rank of an entry in the land register depends on the date of receipt of the corresponding land register application. It is therefore strongly recommended to inspect the land register in order to clarify the existence of any prior rights/encumbrances. To secure one's own rank, the so-called remark of the ranking serves as a safeguard, which must be applied for in advance at the land register court. The land registry court then passes a corresponding ranking resolution, which is valid for a period of 1 year. A disposal of the real estate is then only possible by presenting the ranking resolution, of which only 1 original copy exists.
Incidental purchase costs include in particular brokerage fees, land transfer tax (GrESt), registration fee, real estate income tax (ImmoESt).
In connection with the GrESt (real estate transfer tax), a distinction must be made as to whether the transaction is to be qualified as a transaction against payment or free of charge. A purchase of real estate is always against payment (with the exception of an acquisition within the beneficiary family circle). In the case of real estate purchases (as transactions against payment), the real estate transfer tax is generally 3.5% of the purchase price or the value of the property as the minimum assessment basis, if the purchase price is lower. In the case of transactions without payment, the assessment base is the land value and a graduated model is applied (up to EUR 250,000 - 0.5%; for the next EUR 150,000 - 2%; above that 3.5%). The tax debtor is the buyer.
The court registration fee to be paid by the buyer for the buyer's ownership right is 1.1% of the purchase price.
The ImmoESt (real estate profit tax) resulting from private sales of real estate - with few exceptions and subject to the existence of exceptional circumstances - to 30% of the capital gains. The tax debtor ist the seller.
The attorney acting as the contract constructor and trustee usually also handles the land registry for the purchase of the property. This includes, for example, the cancellation of existing mortgages and also the entry of the buyer's ownership right in the land register.
You need support in connection with your real estate project? We take over the examination of existing purchase contracts as well as the entire support in the sale or purchase of your dream property.
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