Condo Ownership In Austria: What Are Your Rights?

If you're thinking about buying a condo in Austria, there are a few things you should know. Firstly, while Austria is generally considered an excellent place to invest in real estate, there are some restrictions in place for non-EU citizens. Each municipality has different laws, and some areas, like the beautiful Tyrol and Vorarlberg ski regions, are only available for purchase by EU citizens. However, even in these regions, there may be ways for non-EU citizens to buy property. It's important to check with the individual local authority, as they will assess each case separately.

Another thing to keep in mind is that the process of buying property in Austria can be complex, especially for non-EU nationals. In some provinces, non-EU nationals may need to purchase a foreigner's purchase permit, and there may be other requirements as well. It's always a good idea to consult a lawyer to understand the specific requirements for your situation.

Despite these challenges, it's definitely possible for foreigners to own condos in Austria. With the right knowledge and assistance, you can navigate the process successfully and enjoy all the benefits of owning a property in this charming country.

Condominium ownership

Under Austrian law, condominium ownership is only possible in conjunction with pro-rata ownership of the land on which the apartment building stands. Owners of an apartment are thus essentially automatically co-owners of the land on which the building is located. This immaterial share in the land is expressed in the Land Register by a fraction. For example, if a building has multiple apartments, fractions such as 45/1000 or 87/2000 can easily arise.

The key difference between condominium ownership and "mere co-ownership" is that the right to exclusively use a part of the building (an apartment) is inseparably associated with the co-ownership share in the land. It is registered in the Land Register together with the immaterial share in the land and is thus considered secured. The condominium owner is entitled to use the apartment privately, rent it out, or leave it vacant. All other components, such as staircases or gardens, may be used exclusively by all co-owners, as co-ownership exists in these parts of the building.

In addition, the condominium owner is free to sell or bequeath their apartment.

There is no unified procedure for property acquisition in Austria. Each federal state and municipality has its own rules and regulations. There are three main forms of residential property ownership as defined by municipal authorities: main residence, second home, and rental property for tourism. Each category has its own rules and limitations for property buyers and owners.

It is important to note that non-EU citizens face restrictions on property ownership in certain regions of Austria, such as Tyrol and Vorarlberg. Resident permit holders can generally buy property in most regions, except for these two states. However, even in these restricted areas, there may be ways for non-EU citizens to purchase property through legal entities or with special permission from local authorities.

Expats buying property

Foreigners can buy property in Austria, but there are some restrictions in place. The ability to buy property in Austria depends on the nationality of the buyer and the type of property they want to buy.

EU Citizens

If you are an EU citizen, the process of buying property in Austria is relatively straightforward and similar to that for Austrian citizens. There are no restrictions for EU and European Economic Area (EEA) nationals buying properties in Austria.

Non-EU Citizens

For non-EU citizens, the rules are more stringent. Non-EU nationals usually require special approval to purchase real estate in Austria. This approval is obtained from the local government of the state where the property is located. Each Austrian state has its own regulations, and the approval process can vary significantly.

Special Cases

In some Austrian states, such as Graz, nationals of third countries do not need to obtain authorisation to buy property. In Vienna, if one spouse purchasing a property has Austrian citizenship, authorisation is not required.

Types of Property

Residential properties are generally more accessible for foreigners to purchase than agricultural land or forests, which are often subject to stricter controls.

Visas and Permits

There is no requirement to reside in Austria to buy property, nor is there a specific visa or permit needed for the purchase of property. However, owning property does not grant residency rights. If you plan to live in Austria, separate immigration and residency rules apply.

Financial Considerations

In addition to the purchase price, buyers should account for additional costs such as real estate transfer tax, legal fees, notary fees, and real estate agent fees. These can add a significant amount to the overall cost of the transaction.

Property types

There are three main forms of residential property ownership in Austria, as defined by municipal authorities. Each category has its own rules and limitations for property buyers and owners. It is important for buyers to know what type of property they wish to invest in. The three types are:

• Main residence (Hauptwohnsitz): The person permanently registered at this property is a tax resident of Austria and must live there at least 180 days a year. Permanent registration means the individual has a temporary or permanent residence permit. This property can be used by the owner or rented out. In popular tourist areas, 95% of all property is categorised as Hauptwohnsitz.
• Second home (Nebenwohnsitz): This type of property is reserved for personal temporary residence, short-term rentals for tourists or long-term rentals for locals.
• Rental property for tourism (touristische Nutzung): This type of property is also known as "buy-to-let". The owner lives in it for a predetermined number of weeks a year and rents it through a managing company for the rest of the year. Most commonly, this company is also the management company for the building (Hausverwaltung).

There are two types of property in Austria:

• Complete property: The buyer has ownership of the house and land but doesn't have permission to build further on the land.
• Co-property: The buyer has permission to develop and build more structures on the land. You'll want to ensure you have Baurecht, which is a specific property right that grants owners the right to construct buildings.

In addition, condominium ownership is a special form of co-ownership. In addition to being a co-owner of the entire property, a condominium owner has the right to the sole use and enjoyment of a specific unit in the property (e.g. a flat), which they may freely dispose of without the other co-owners' agreement. Condominium ownership is not created automatically and must be established through a condominium agreement, signed by all co-owners, and registration in the land registry.

Registration and taxes

The sale of real estate to foreigners is limited in Austria: you must obtain permission from a municipality for the purchase. The possibility and conditions of purchase depend on the region. In the federal states of Tyrol and Vorarlberg, for example, only EU citizens can purchase real estate.

The acquisition of real estate in Austria is contingent upon the making of a "consensus agreement" between the contracting parties for goods and a price. A purchase agreement is concluded when there is an agreement on the object and the price of the sale.

To become a homeowner of a specific property, such as a condominium, it is mandatory to enter into two contracts: a purchase agreement for the parts of the real estate and a written condominium contract that establishes home ownership.

The purchase agreement for a condominium constitutes a legal transaction that involves joint covenants and the payment of a price, which is called a title. This title is then registered in the land register or register of deeds books. The attorney retained to handle the execution of the purchase agreement must have pertinent experience to meet the stringent requirements and subsequently file for the register of deeds request.

The total transactional costs of buying real estate in Austria are high, ranging between 9.4% and 13% of the property value or sales price. The following fees are to be expected:

• Legal fees for the contract set up by a lawyer or notary: 1% to 3% of the purchase price (+20% VAT)
• Property Transfer Tax: typically a flat rate of 3.5% of the property value, but generally 2% for transfers between relatives
• Value-Added Tax (VAT): only for newly-built properties; can be claimed back if the property is leased out, but the rental income would then be liable for VAT, plus a tourist tax of around €0.10 per person per night
• Registration Duty: paid to the Land Register
• Notary Fee: 2% + 20% VAT, depending on the size of the property
• Real Estate Agent's Fee: set by law at 3% to 4% of the property's purchase price or market value (+20% VAT); both buyer and seller pay this fee
• Stamp duty: 0.5% to 1%
• Property registration: 1.1%
• Mortgage fees: a bank fee of around 1% of the loan and a court registration fee of 1.2% of the loan amount

In addition to the above fees, there are also taxes to be paid, which accrue as a result of the materialization of the purchase process. These include:

• Real estate acquisition tax/transfer tax: 3.5%
• Registration fees/Land Registry: 1.1%
• Real estate capital gains tax
• Value-added tax (VAT)

The owner of the property is liable for the real estate tax, which is collected by the municipalities and can be charged (pro-rata) to renters as part of the running costs of a house. The real estate tax base is determined by the Tax Authority Austria, which applies a tax measurement figure to the unit value. Under the Finanzausgleichsgesetz, municipalities are entitled to apply a uniform assessment rate of up to 500% on the real estate tax base when determining the tax.

Where it exceeds €75 per year, the real estate tax is collected in four instalments on February 15, May 15, August 15, and November 15, respectively. Amounts up to €75 must be paid once a year on May 15.

Austria does not have a property tax, only a land tax, which is included in the monthly utility bills. For an 80-square-metre apartment, the land tax is approximately €10 per month.

Income tax is payable on rental income, with Austria having a progressive income tax rate of 20% to 55%, depending on annual income. The average rate is 25%.

Financing options

There are various financing options available when it comes to purchasing real estate in Austria. Mortgages in Austria are relatively straightforward to set up and foreigners are eligible for loans. Fixed-rate mortgages are the most common, financing up to a maximum of 70% of the property value over 15 to 30 years. Buyers can also suggest the loan duration. Adjustable-rate loans are available, offering lower initial interest rates but are riskier in the long term. Alternatively, you can choose a mortgage combination, which combines both types.

Most banks allow for monthly or quarterly mortgage repayments, and it is possible to pay off your mortgage early. Non-EU citizens will be considered a greater risk and the bank may demand additional documentary evidence. It is recommended to open a bank account with a European bank to simplify the process.

The total transactional costs of buying real estate in Austria are high, ranging from 9.4% to 13% of the property value or sales price. These costs include legal fees, property transfer tax, value-added tax (VAT), registration duty, notary fees, real estate agent's fees, stamp duty, property registration, and mortgage fees.

Another option for financing your real estate purchase is to invest through a private investment fund (real estate investment trust). This type of legal entity offers tax incentives and preferential taxation, with a reduced income tax rate of 2.5% on the resale of donated properties.

Additionally, you can explore the option of a limited partnership, which allows for the collective purchase and leasing of real estate. Each partner retains profits proportional to their share of the capital, and the partnership can be dissolved after selling the assets for a profit.

It is important to note that the sale of real estate to foreigners in Austria is limited and requires permission from the municipality. The possibility and conditions of purchase vary depending on the region. In federal states like Tyrol and Vorarlberg, one must be an EU citizen or register the purchase for a European company.

Frequently asked questions