The Real Estate transfer tax in Austria may be canceled in the near future

Property acquisition in Austria has become fairly difficult in terms of property prices for many individuals in urban areas. One of the main factors that has affected the affordability, are the stricter lending guidelines, which came into force in 2022.

In order to ease the burden, Austrian politicians have been considering making some changes to the financial side of the real estate purchase. In particular, the Finance Minister; Magnus Brunner, offered to cancel or at least reduce the land transfer tax, as well as the land register entry fee for first-time homebuyers, with a maximum property value of EUR 500,000.

At the moment, the real estate transfer tax amounts to 3.5% of the purchase cost, while the land registry entry fee is 1.1%. If the property is mortgaged, then another 1.2% is added to the fee of the land registry entry. This is a considerable sum on top of the property cost itself.

The idea to abolish or reduce the real estate taxes has been flying around for a long period of time. For instance, last summer the State Secretary for Youth; Claudia Plakolm said that young people should stop paying property transfer tax when it comes to the purchase of their first home. This suggestion was supported by many OVPs, among which was the Vorarlberg Governor, Markus Wallner.

There are a number of European countries that have reduced the real estate transfer tax or canceled it completely. Select countries have also seen a significant difference in the tax charge between purchasing as an investor or as an owner-occupant. It is worth mentioning the Netherlands, where individuals under 35, who acquire an owner-occupied property for a maximum of EUR 400,000, do not have to pay the real estate transfer tax.

According to the NEOS Lab; a think tank of the opposition party, one can save from EUR 15,000 up to EUR 25,000 when acquiring a 246 sq. ft apartment if the Austrian government were to introduce an exemption of EUR 500,000 for the property transfer tax and the elimination of the land registry fee.