Selling an inherited flat: What taxes do you pay?

In my work as a real estate agent in Tyrol, I have noticed that when selling real estate, my clients are particularly concerned about the tax levies. Many come to me with the question "Mr Großruck, I want to sell an inherited flat: What taxes do I have to pay?"

Are you in a similar situation? Then this is the right article for you. Because I explain to you in an easy-to-understand way what tax charges you have to expect when selling an inherited flat.

Tax #1: Real estate transfer tax

In Austria, land transfer tax must be paid when a piece of land or real estate changes ownership - regardless of whether it is a gift or an inheritance.

It should be noted here that the amount of the real estate transfer tax in the case of a gift or inheritance depends on the value of the property.

If the property value of your home is...

• ... below 250,000 euros, the land transfer tax is 0.5 per cent of the market value
• ... between 250,000 and 400,000 euros, you pay 2 percent
• ... over 400,000 euros, 3.5 percent of the market value is due in land transfer tax.

The real estate transfer tax explained with two examples

Example 1: You have inherited a 2-room flat. The value is 350,000 euros. By law, you still pay a reduced real estate transfer tax of 2 percent for this value.

350,000 x 0.02 = 7,000 euros land transfer tax

Example 2: You inherit a 3-room flat in a good location with a market value of 420,000 euros. You therefore pay the full tax rate of 3.5 percent,

420,000 x 0.035 = 14,700 euros

Special feature of selling an inherited flat: Real estate transfer tax is due twice!

When you sell your inherited home, land transfer tax becomes due in two situations:

1. When the property is transferred from the deceased to you.
2. When transferring from you to the buyer.

Note: The land register entry fee, on the other hand, can be saved once through a so-called jump entry. This transfers the flat directly from the deceased to the buyer.

Real estate transfer tax on the sale is usually paid by the buyer

There is no official regulation by law, but normally the buyer takes over the transfer of the real estate transfer tax for the sale. You should definitely put this agreement in writing in the contract!

Attention: Choose a reliable buyer with the necessary financial means. If the new owner does not pay the real estate transfer tax, you as the seller must assume the payment!

Tax #2: Real Estate Income Tax (ImmoESt)

When real estate is sold in Austria, real estate income tax (ImmoESt) must be paid. How high the taxation is depends on whether it is an "old case" or a "new case". You need to know whether the property to be sold was acquired before or after 31.03.2002.

Old case with example: Sale of an inherited flat as a special case

You have inherited a flat that was purchased before 31 March 2002. If you sell this inherited flat, the following special provision applies to the ImmoESt:

You have to pay 30 per cent of 14 per cent of the sales price when you sell. Why? The Austrian tax office assumes fictitious acquisition costs of 86 percent of the sales price; the remaining 14 "profit" is taxed at 30 percent.

Let me explain this complicated regulation with an example:

The flat was bought on 01.01.2000 for 150,000 Euros.
You are now selling the flat for 300,000 Euros.

Fictitious purchase price: 86% of 300,000 euros = 258,000 euros
14 percent of the sales price = 42,000 euros
30 per cent of 42,000 euros = 12,600 euros

Accordingly, they would have to pay 12,600 euros in immoESt to the state.

Neufall selling inherited flat: taxes of 30 per cent of the sales profit

The flat was bought on 01.01.2005 for 150,000 Euros.
You sell the flat for 300,000 Euros.

Since the flat was acquired after 31.03.2002, the regulation for the new case of ImmoESt applies. The sales profit - the difference between the purchase price and the sales price - is taxed at 30 percent.

Profit on sale: 300,000 - 150,000 = 150,000 euros
ImmoESt: 30 percent of 150,000 euros = 45,000 euros

Conclusion: Pay attention to special features of ImmoESt and double payment of real estate transfer tax

When you sell an inherited flat, two taxes are due: the real estate income tax and the real estate transfer tax; the latter even has to be paid twice.

Since experience shows that the average consumer does not like to deal with tax issues, it is advisable to seek the support of a professional. On the one hand, a tax advisor or a real estate agent can provide advice.

So if you still have questions about what taxes apply when selling an inherited home, feel free to contact us.

Due to our experience as real estate agents in Tyrol and our specific training, we can also advise you on tax levies and relieve you of the burden of selling.

How to reach us: Via e-mail(immobilien@arealita.at), via telephone(+ 43 512 580 242) or via contact form (click here!).

With kind regards

Yours, Bernhard Großruck

 

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