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Everything you need to know is included in our Austria Property Pack
Austria is a popular destination for foreigners who want to invest in real estate.
It boasts stunning mountain views, a vibrant cultural scene, and hospitable locals. But purchasing property in a foreign country can be a daunting task, particularly when it comes to navigating the legalities and regulations.
This guide is here to help foreign buyers understand how the property market works in Austria. It covers all the essential information in a straightforward and easy-to-follow manner.
Also, for a more in-depth analysis, you can check our property pack for Austria.Can you purchase and own a property in Austria as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Austria for US citizens.
Purchasing real estate in Austria as a foreigner involves several unique considerations and regulations that differ from those applicable to local citizens.
Firstly, the ability of foreigners to buy property in Austria largely depends on their nationality and the type of property they are interested in.
For EU citizens, the process is relatively straightforward and similar to that for Austrian citizens. However, for non-EU citizens, the rules are more stringent.
Non-EU nationals generally 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. The requirement for this authorization stems from a desire to control foreign investment in Austrian land and property.
Regarding the types of property, residential properties are usually more accessible for foreigners to purchase than agricultural land or forests. The purchase of agricultural land by foreigners is often subject to stricter controls and can be more challenging to obtain approval for.
There is no general requirement to reside in Austria to buy property there, nor is there a specific visa or permit needed just for the purchase of property.
However, owning property in Austria does not automatically grant residency rights. If you plan to live in Austria, separate immigration and residency rules apply, which are independent of property ownership.
The process doesn’t typically mandate a minimum investment level, but higher-value transactions might be scrutinized more closely during the approval process.
In some cases, the intended use of the property might also be a factor in gaining approval.
For instance, if the property is intended for personal use as opposed to rental or commercial purposes, the approval might be easier to obtain.
Lastly, it’s important to be aware of the financial aspects. 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.
Can you become a resident in Austria by owning a property?
Austria does not offer a direct residency-by-investment program linked to real estate purchases, unlike some other countries.
This means that simply buying property in Austria does not automatically grant you residency rights.
However, there are pathways to residency that investors and property owners might consider, although they are not as straightforward as a direct real estate investment program.
To become a resident in Austria, you typically need to fulfill other criteria. These can include having a job in Austria, being a student, or having sufficient financial means to support yourself without relying on public funds.
For non-EU nationals, this often involves obtaining a visa or a residence permit that aligns with their specific circumstances, such as a work visa, student visa, or a “Red-White-Red Card,” which is targeted at highly qualified workers, skilled workers in shortage occupations, and other specific categories.
In terms of investment, Austria does have an investment residency program, but it's quite different from real estate investment schemes.
This program usually requires a substantial financial investment in the Austrian economy, such as making a direct investment in an Austrian business.
The required investment amount is typically significant, often in the millions of euros, and the process includes a thorough examination of the potential economic benefit of your investment to Austria.
If you manage to obtain residency in Austria through employment, business investment, or other means, it’s important to understand the nature of this residency.
Initially, residency permits are often temporary and need to be renewed. Permanent residency can be obtained after legally living in Austria for a certain number of years, usually five to ten years, depending on your specific circumstances.
Once you have permanent residency, you may eventually be eligible to apply for Austrian citizenship, but this is a separate process with its own requirements, including proficiency in the German language and a minimum period of continuous residence in Austria.
Obtaining citizenship also typically requires renouncing your original citizenship, as Austria generally does not allow dual citizenship.
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Market data
You can find fresh and updated data in our pack of documents related to the real estate market in Austria.
By taking a closer look at the GDP per capita indicator, it becomes apparent that Austrian people have become 1.9% richer over the course of last 5 years.
If the population's wealth grows, it can lead to a heightened demand for real estate, potentially resulting in price increases in the future.
Looking at the data reported by Numbeo, we can see that rental properties in Austria offer gross rental yields between 1.3% and 4.0%.
You might know it already but when rental yields are minimal, investors might face challenges in covering expenses related to property ownership, such as mortgage payments, maintenance costs, property taxes, and insurance.
To know more, you can also read our dedicated article: is it a good time to buy a property in Austria?
Life as an expat
Life as an expat in Austria is generally quite pleasant.
Austria is a beautiful country, with stunning mountain scenery, charming cities, and a rich cultural heritage.
The country is known for its excellent quality of life, with low crime rates, good healthcare, and excellent public transport. Expats can expect to find a friendly and welcoming atmosphere, with a strong sense of community.
The cost of living in Austria is relatively high, but this is offset by the high wages. Austria is also a great place to learn German, as the language is widely spoken and there are plenty of language schools available. Overall, life as an expat in Austria is a rewarding experience.
What are the best places to buy a property in Austria?
This table summarizes some of the best places to buy a property in Austria.
| City / Region | Population | Average Price per sqm (€) | Strengths |
|---|---|---|---|
| Vienna | ≈ 1.9 million | 4,000 - 8,000 | Cultural capital, historical architecture, high quality of life, vibrant arts scene |
| Salzburg | ≈ 155,000 | 3,500 - 7,000 | Musical heritage, picturesque old town, proximity to Alps, festivals |
| Innsbruck | ≈ 132,000 | 4,000 - 6,500 | Alpine beauty, winter sports, university town, vibrant cultural events |
| Graz | ≈ 300,000 | 2,500 - 4,500 | Historic city center, culinary delights, student-friendly, green spaces |
| Linz | ≈ 205,000 | 2,500 - 4,000 | Industrial heritage, Danube riverfront, vibrant arts scene, affordable housing |
| Bregenz | ≈ 28,000 | 3,500 - 6,000 | Stunning lakeside location, Bregenz Festival, outdoor activities, close to Switzerland and Germany |
| Klagenfurt | ≈ 100,000 | 2,500 - 4,000 | Capital of Carinthia, Lake Wörthersee, mild climate, recreational opportunities |
Do you need a lawyer to buy a property in Austria?
When purchasing a property in Austria, engaging a local lawyer can provide valuable assistance in navigating the legal requirements and ensuring a successful transaction.
One key document they can help you with is the Kaufvertrag (Purchase Agreement), which is a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Austrian lawyer can also assist with conducting a Title Search (Grundbuchauszug) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Moreover, they can guide you through the process of obtaining necessary permits and authorizations, such as approval from the local Land Registry Office.
They will ensure that all applicable taxes and fees, such as the Real Estate Transfer Tax (Grunderwerbsteuer) and Notary Fees (Notargebühren), are paid correctly and in compliance with Austrian laws.
What are the risks when buying real estate in Austria?
We've got an article dedicated to the risks associated with purchasing property in Austria.
The Austrian legal system is quite complex and unique, so it is important to be aware of the specific risks when buying a property in Austria.
One risk is that all property purchases must be registered with the Austrian Land Registry. This process can be quite lengthy and requires a great deal of paperwork and legal expertise. If the registration is not done correctly, it could lead to problems later on.
Another risk is that Austrian law does not recognize the concept of a "right of first refusal" when it comes to purchasing a property. This means that a buyer cannot be sure that they will be the first to be informed of a property that is up for sale. This could lead to the property being sold to someone else before the buyer has a chance to make an offer.
Finally, it is important to be aware of the Austrian tax system when purchasing a property. The tax rate on property can be quite high in Austria, so it is important to be aware of the potential costs associated with buying a property.
Everything you need to know is included in our Austria Property Pack
What are the documents needed for a real estate transaction in Austria?
When purchasing a property in Austria, the following documents are generally required:
1. National Identification Document such as a passport or ID card
2. Proof of funds such as a bank statement
3. Proof of address such as a utility bill
4. A valid Austrian residence permit
5. A certified copy of the deed of sale
6. A tax identification number
7. A statement of the property's energy performance
8. A land registry certificate
We review each of these documents and tell you how to use them in our property pack for Austria.
How to approach negotiations with Austrian people?
When you're buying a property in Austria, it's essential to understand and embrace the local culture and norms.
Austrians really appreciate politeness and formalities in their interactions, so it's important to use the appropriate titles like "Herr" (Mr.) or "Frau" (Mrs./Ms.) and greet them with a friendly handshake. Punctuality is highly valued, so make sure you're on time for appointments.
Want to make a good impression? Consider offering a small token of respect, like a box of delicious chocolates or a bottle of top-notch Austrian wine. But remember, it's best to avoid extravagant gifts that might come off as excessive or inappropriate.
Austrians tend to value their privacy and might seem a bit reserved at first. Take your time to build trust and establish personal connections. Networking and getting referrals from trusted contacts can make your property purchase journey in Austria much smoother.
Last but not least, don't forget to get familiar with the local customs, regulations, and legal requirements. It's wise to seek legal advice and thoroughly research property laws and tax regulations in Austria before entering into any agreements.
Can foreigners get a mortgage in Austria?
Foreigners can get property loans in Austria, but the eligibility criteria and requirements vary depending on the lender and loan terms.
Foreigners seeking a property loan in Austria generally need a valid residence permit, proof of income, a good credit history, and may be required to make a down payment of a certain percentage of the property's value.
Some banks in Austria that can grant mortgages to foreigners include Erste Bank, Raiffeisen Bank, and Bank Austria.
Additionally, in Austria, mortgage rates for a 20-year term range between 0% and 4%, offering borrowers attractive financing options.
What are the taxes related to a property transaction in Austria?
Here is a breakdown of taxes related to a property transaction in Austria.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Property Transfer Tax | A tax on the transfer of property ownership | 3.5% of the property value and is reduced to 2% for transfer between close relatives | Buyer |
| Value Added Tax (VAT) | Tax on the sale of newly-built properties | 20% of the purchase price for new properties, exemption for existing properties | Buyer |
| Real Estate Tax | Annual tax on real estate property ownership | Property market value multiplied by a federal rate (0.20%) and a municipal coefficient (up to 500%) | Owner |
| Capital Gains Tax | Tax on the capital gain from the sale of a property | Between 15% and 30% on the net gain (the difference between the sale and purchase prices) | Seller |
For a more detailed calculation, refer to:
- the Austrian Ministry of Finance's website
- the Austrian Ministry of Finance's website
- the Austrian Ministry of Finance's website
What fees are involved in a property transaction in Austria?
Below, you'll find a list of fees involved in a property transaction in Austria.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Real Estate Agent Fee | Fee charged by real estate agents for their services | Around 3% to 4% of the property purchase price (split between the seller and the buyer) | Seller and Buyer |
| Notary Fee | Fee for notarizing the property transfer documents | A maximum of 120 euros per signature | Seller and Buyer |
| Real Estate Title Registration Duty | Fee for entering the property in the Land Register | 1.1% of the property value | Buyer |
| Legal Fee | Fee for legal services related to the property transfer | Between 1% and 3% of the property sale price | Buyer |
-Buying property as a foreigner in Switzerland: the guide
Buying real estate in Austria can be risky
An increasing number of foreign investors are showing interest in Austria. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.