Real Estate Transfer Tax

Real Estate Transfer Tax

When buying a plot of land or a property, real estate transfer tax is incurred in Austria. This tax liability not only affects classic purchase agreements, but also gratuitous transfers such as donations and inheritances.

The real estate transfer tax (GrESt) is a one-off tax that is incurred with every acquisition of domestic land.

Object of Real Estate Transfer Tax

According to § 2 GrEStG, the real estate transfer tax exclusively covers the acquisition of land in Austria including its civil law accessories. This includes in particular:

• Land and soil
• Buildings
• Accretion and appurtenances
• Building rights
• Superstructures

Not part of the property are:

• Machines and technical equipment that belong to a company
• Other movable inventory

Acquisition Processes

The real estate transfer tax is subject to the acquisition of domestic land for consideration or free of charge.

This includes in particular the following acquisition processes:

• Acquisition of ownership through purchase, exchange, inheritance, compulsory portion or adverse possession
• Acquisition of economic power of disposal, e.g. trust
• Acquisition processes in connection with partnerships and corporations

In addition, however, the law knows two special facts that are exclusively relevant for entrepreneurial structures: Real estate transfer tax for companies.

Tax Exemptions when Buying Real Estate

The Real Estate Transfer Tax Act knows a variety of exemptions. The following acquisition processes are exempt:

Apartment Transfer between Partners

Spouses or registered partners benefit from an allowance for 150 m² of living space when jointly purchasing or inheriting an apartment. Certain residence and usage rules must be observed for this.

Triviality Limit

No tax is payable if the assessment basis is less than €1,100. For certain land divisions, the limit of €2,000 applies.

Promotion of Non-Profit, Charitable and Ecclesiastical Purposes

Free transfers to non-profit, charitable or ecclesiastical institutions are exempt. Transfers that are carried out by an official measure for spatial planning or building land design are also tax-free, but only if they were not voluntarily agreed.

Real Division

An exemption can also exist in the case of a real division, i.e. the division of a common property into individual ownership. The prerequisite is that each co-owner only receives the value that corresponds to his original share.

Official Intervention

If a property is transferred through expropriation or to avoid official intervention, no tax is also incurred.

Assessment Basis

The assessment basis of the real estate transfer tax depends on which type of property is transferred and in which legal or economic context the acquisition process stands. In principle, the tax is calculated according to the consideration, i.e. what is actually spent for the property.

In certain cases, however, not the consideration, but the property value or the standard value is used, especially for transfers within the family or for gratuitous processes such as inheritance or compulsory portion transfer. The standard value is used as the assessment basis exclusively for agricultural and forestry properties.

If the property belongs to the assets of a real estate company, it is mandatory to use the fair value as the assessment basis. This must be proven by an expert opinion or comparable evidence.

Peter Harlander
Harlander & Partner Rechtsanwälte „Die richtige Wahl der Bemessungsgrundlage kann tausende Euro sparen, mit anwaltlicher Begleitung lassen sich steuerliche Fallstricke sicher umgehen“

Real Estate Transfer Tax and Registration Fee

When buying a property, real estate transfer tax of 3.5% of the purchase price is usually incurred. If the acquisition takes place among close relatives, the tax rate is reduced to 2%.

In addition to the real estate transfer tax, an registration fee of 1.1% of the purchase price is to be paid for the registration of the ownership right in the land register. This so-called incorporation fee is due together with the registration and is mandatory.

Tax Debt and Tax Debtor

The real estate transfer tax arises as soon as the contracting parties legally conclude the acquisition. Tax debtors are generally all persons involved in the acquisition process, i.e. usually the buyer and the seller.

In addition to the standard case of the conclusion of the contract, the Real Estate Transfer Tax Act also regulates special exceptions, for example in the case of inheritances, legacies or donations on death. In these cases, the tax debt arises at a different time.

Sebastian Riedlmair
Harlander & Partner Attorneys „Gerade bei Schenkungen oder Übergaben im Familienkreis wird die Grunderwerbsteuer oft unterschätzt, falsche Annahmen führen schnell zu vermeidbaren Kosten.“

Payment of Real Estate Transfer Tax

The real estate transfer tax is paid either by self-assessment or by means of a tax return. Both variants must be carried out by a lawyer or notary.

The self-assessment offers the advantage that it significantly accelerates the property acquisition. The party representative not only reports and pays the tax via FinanzOnline, but also checks which tax rate applies, whether an exemption is possible and which assessment basis is to be applied in individual cases.

The timely and correct payment is a prerequisite for registration in the land register. Without it, the ownership right cannot be transferred.

Certificate of No Objection According to § 160 BAO

The tax office issues a certificate of no objection in accordance with § 160 BAO. With this, the tax office confirms that the real estate transfer tax has been paid in full and correctly or that no such tax is incurred.

This certificate is a prerequisite for the land registry court to register the transfer of ownership. Without this confirmation, the land registry procedure will be interrupted.

Your Benefits with Legal Assistance

The real estate transfer tax seems clearly regulated at first glance, but in practice it turns out that small errors can quickly lead to unnecessary tax burdens or delays in the land register. Early legal advice creates security.

Frequently Asked Questions – FAQ