FAQ’s – Buying a ski property in AustriaBuying a ski chalet or apartment in the Austrian Alps is a luxury lifestyle choice and an exciting time for you and your family and friends. Our comprehensive FAQ’s should help explain how to buy a ski property in Austria and give you some essential information you will need.
Who can buy in Austria?Austria has been a member of the EU since 1995. Although EU-citizens are allowed to buy and live permanently in any house they wish in Austria, these rules do not apply when it comes to buying a holiday home. Austria is divided into nine self-governing Federal Provinces and each of these Provinces has their own rules when it comes to buying a holiday home:
If you are an EU citizen you can buy a holiday property in any of Austria’s nine Provinces and the process is very straightforward. If you own an EU company it is also possible to buy in the company’s name.
If you are a non-EU Citizen then there are restrictions on what you can buy in Austria. It is only possible to buy a property with a ‘second home’ status in the Tyrol Province, Salzburg Province or the Vorarlberg Province. It is however possible to buy in some of the other provinces.
EU Companies:Alternatively, you can buy a property in the name of an EU company. If you are the owner of an EU company then it is possible to buy anywhere in Austria.
Can I Buy In The Name Of A Company?Yes, there are no restrictions in Austria if buying in the name of an EU company.
If you want to buy a property with more than two owners then buying in the name of an EU company is a good option as it is only possible to have two individual names on the purchase deeds in Austria.
Another advantage is that 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 from around €2,000 and you will be required to pay a yearly maintenance fee of around €1000 as well as formalities such as holding an Annual General Meeting.
What is the Purchase Process
The process of buying a property in Austria is very straightforward. The notary, who is a semi-public official, 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. The notary has a duty to protect the interests of both parties. 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 you 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 your behalf.
You will need to take the power of attorney to either a Notary Public (not a solicitor) in your country of residence to have your signature witnessed and (in the UK) the Notary Public will then 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. If you prefer, you can hop on a plane and sign in person at the notary’s office!
What are the purchase costs?
Purchase costs for buying a property in Austria work out about 6.6% of the gross purchase price. You 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
No buyers fees!Alpine Marketing does not charge any fees to the buyer. Buyer’s fees can be as much 3%, so there is an instant saving when you buy through us. We are also completely independent sales agents working with all the top developers in the Austrian Alps. As we do not develop any property ourselves we can offer unbiased, independent advice.
How do i pay for my chalet?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)
Can I buy with a mortgage?Yes, if you are interested in purchasing with a mortgage it is possible to borrow up to 60% of the purchase price from an Austrian Bank. Banks will not lend across boarders, so if you want to buy with a mortgage in Austria then you will need to take a loan through an Austrian bank. Variable interest rates are around 2%, and it is also possible to take fixed rate mortgages for up to 20 years. We can recommend banks in all of the ski resorts we sell in as we have contacts throughout Austria.
Will they lend to me?Banks are happy to lend so long as you are buying a property and renting it for touristic use – either flexible rental property, fully managed rental property, or property with a guaranteed rental return. In this case your property would be classified like a ‘small business’ and the income you earn from your rentals may be used to cover the loan.
Tax AdvantagesThere may be tax advantages to taking a mortgage to buy your ski property. If you rent your property it is possible to offset the interest on your mortgage payments against any profits you may make on your rental income, therefore reducing your tax liability – you can also write off up to 10% of the costs of your furniture as depreciation against your rental income. Additionally, as your rental income will be in euros you do not have any currency exposure if you intend paying your mortgage from rental income.
What are the costs for taking a Mortgage?
Banks will 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 lender in the land registry.
Other financing Possibilities…
There may be other options available to you to finance buying a ski property in Austria. An alternative option is to borrow against an existing property in your own country of residence and to make a purchase as a cash buyer.
International Transfers and foreign exchange dealings
When you are buying a ski property in Austria and making international money transfers, fluctuating exchange rates can make a huge difference to the final amount you receive in your bank account.
We work closely with a leading currency exchange expert for all of our clients money transfers, international payments & foreign exchange dealing’s. Our contacts here provide the quickest and easiest way to transfer money internationally and consistently provide bank-beating exchange rates to help both companies and private individuals achieve significant savings. To find out more click here.
When will my chalet be built?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.
Are there Construction Guarantees?Yes, 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.
How will I furnish my Chalet?
Most of our chalets and apartments are either built to-order or already constructed and remain ‘unfitted’ so that you can personalise your property which is included in the price. You can choose from an extensive range of bathroom fittings, flooring, and wall tiles etc. Additionally, many of the properties we have available also have the furniture included in the price. The developers for these projects offer a ‘turn key’ service which means they provide every comfort for you so that your property is completely ready to occupy.
Where furniture is not already included in the purchase price we can easily put you in touch with companies that will provide these ‘turn key’ furnishings . We work closely with interior designers who provide an extensive choice to suit every taste ranging from the ultra-modern to romantic traditional styles. These furniture options are extremely flexible and affordable and include everything you will need such as sofas, wardrobes, beds, cutlery, crockery, and linen etc. For more information on which properties already include the cost of furniture please either contact us or see individual property brochures.
Although the cost of the furniture collections are included in many of the properties we sell, for mortgage purposes this cost must be deducted as banks will not lend on furniture. As an example, furniture collections for a 2-bedroom property would usually range somewhere between €20,000 to €40,000 net.
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.
Purchasing a 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.
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 infrastructure of the villages to have a good flow of tourism. The advantage to owners is that they can benefit from their property earning an income for them; and there can also be some great tax advantages to purchasing in this way.
Prefer not to rent?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.
What Are The Rental Options?
Depending on which property you buy there are several rental options. One option is using a large professionally managed tour operator who will efficiently handle all your rentals when you are not using your property. Alternatively you can rent your property yourself with the help of a local tour operator or perhaps even make your own website to advertise your property. Rental companies typically charge between 20% and 25% commission for their services. Whichever option you choose a dedicated management company can deal with the hand over of keys for your guests and the laundering and cleaning of your property when guests have departed.
Guaranteed Income OptionIf you are looking for a ski chalet or apartment with investment in mind and the security of a guaranteed income, we have handpicked some great investment properties for you. Rates are usually guaranteed for a three-year period on a rolling contract which is index-inked offering you piece of mind especially when combined with a fixed-rate.
Fully Managed Rental OptionIf you are looking for a hands-free investment, then we would recommend a fully managed rental service. This is where the developer teams-up with a large tour operator who efficiently handle all your rentals when you are not using your property and then pay you a regular income. As an owner you simply book your forthcoming winter and summer dates in advance and the tour operator will do the rest. Many fully managed chalets and apartments for sale also offer extensive additional facilities including restaurants, spas and swimming pools.
Flexible Rental OptionIf 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.
Prefer not to rent?Second Home Status – 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.
Rental Income And Running Costs?
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.
How Much Can I Expect To Receive In Rental Income?Austrian gross rental yields tend to vary between 4% to 6% whilst Switzerland and France range from 2% to 4%.
Are there tax advantages to renting?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 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.
If you would like further information on this subject please contact us and we will email you our specific Tax-Back Guide.
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 up to 10% of the costs of your furniture 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 it is possible to receive a tax free allowance of between 2,000 – 11,000 euros per person per year, so if two people purchase a property together the allowance could be up to 22,000 euros per year.
VATIf you claim the VAT back on your purchase you will also be required to become VAT registered with the tax authorities for 20 years. You will need to charge VAT at a rate of 13% on your rentals which can then be reclaimed each quarter upon the filing of accounts. We can recommend 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 500 euros per year.
Austrian Income Tax Rates
Profit Percentage Income Tax payable
0 euros – 11,000 euros 0%
11,001 euros – 18,000 euros 25%
18,001 euros – 31,000 euros 35%
31,001 euros – 60,000 euros 42%
60,001 euros – 90,000 euros 48%
90,001 euros – 50%
Income Tax Obligations in your Home CountryYour income tax obligations in your home country also have to be considered so please inform your tax advisor that you are renting out a vacation apartment in Austria, as he will also need to see what profits you have made over the year and make sure that you do not pay tax twice on the same income. If you need help finding a tax advisor, we can put you in touch with UK tax advisors and Austrian tax advisors specialising in ski property.
Tourism TaxWhen 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 TaxThe 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 TaxInheritance tax has been abolished in Austria (effective since August 1, 2008)
NEED A LITTLE SKI PROPERTY ADVICE? – Call our Austrian property specialists on: +44 (0)20 7935 5132 – five minutes on the phone can save a lot of time on wasted research! Alternatively, feel free to email us at email@example.com
Disclaimer: Whilst we make every attempt to ensure the accuracy and reliability of the information we provide, we are not tax advisors or lawyers. We are reliant upon information provided by third parties and therefore, the company, its employees and agents will not be responsible for any loss however arising, from the use of, or reliance upon this information. Legal advice or tax advice must be received by a professional Lawyer or tax advisor and we are happy to put you in touch with companies if you would like further information. These particulars and the company website do not form part of any offer or contract and must not be relied upon as statements or representations of fact. Registered Office: Bentinck House, 12 Bulstrode Street, London W1U 2JF, Registered in England. No. 06423236.