Purchasing an investment apartment in Austria can be a viable way to build long-term wealth and achieve stable returns. However, like any investment, it comes with several economic and legal aspects that need careful attention. This article outlines some key legal points to consider when making such an investment—though it is not intended to be exhaustive.
The Purchase Agreement: More Than Just a Formality
The purchase agreement is the central legal framework for acquiring an investment apartment in Austria. A legally sound contract should clearly address at least the following points:
- Purchase Price and Payment Terms: The agreed-upon price and payment conditions must be explicitly defined.
- Handover Date: When will the property be handed over, and in what condition?
- Seller Liability: Are there provisions for construction defects or environmental issues? Check whether liability has been excluded.
Tip: Have the contract reviewed by an experienced attorney. Clauses regarding liability exclusions or penalties may carry hidden risks. You can find a more detailed article about purchase agreements on our blog. Make sure you get a bilingual contract if you do not understand German.
Reviewing the Land Registry
In addition to the documents provided by the seller or broker, the land registry is an essential source of information for property buyers. Key aspects to examine (or have examined) include:
- Ownership: Does the property legally belong to the seller?
- Encumbrances and Restrictions: Are there mortgages, liens, or third-party usage rights encumbering the property?
- Other Entries: For example, public law obligations such as sidewalk construction or the transfer of land portions.
Rental Law Considerations
Since investment apartments are typically rented out, Austrian rental law plays a crucial role. Key points to consider:
- Rent Caps: Older buildings are often subject to rent caps under the Austrian Tenancy Act (MRG). Ensure that the rent you are planning to charge complies with legal limits.
- Lease Agreement: A clearly written lease agreement helps avoid legal disputes with tenants. Key elements include lease duration, notice periods, and operating cost regulations. Austrian case law tends to favor tenants, especially in residential leases—our blog covers some common pitfalls in this area.
- Tenant Protections: Tenants in Austria enjoy strong eviction protections. This should be factored into long-term planning.
Tax Considerations: A brief Overview
Tax-related aspects are relatively straightforward but still require attention:
- Real Estate Transfer Tax: 3.5% of the tax base (usually the purchase price for sale agreements).
- Registration Fee for Ownership Rights: 1.1% of the tax base (usually the purchase price for sale agreements).
- Registration Fee for Mortgages: 1.2% of the tax base (typically the amount secured by the lien).
- Income Tax and VAT: Rental income is generally taxable. Depending on your situation (other taxable income, personal residency outside Austria) you will also need to assess wheter you need to take care of VAT. Consulting with a tax advisor can help you account for all deductible expenses.
Do You Have Additional Questions About Buying Real Estate in Austria?
If you have more questions or require legal assistance for purchasing real estate in Austria, we have extensive experience in this area. Feel free to contact us at office@geuer.at or by phone at +43-1-4380072.