Thinking of buying an investment property for sale in Austria?
There are a number of income tax and VAT benefits when you commercially rent out Austrian property, making it an excellent investment.
Income Tax Advantages
To get the VAT discount, you must be ready to rent out your new property. Think of it as an investment, and use it as a holiday home. Simply rent it out the other months of the year and make a profit, plus qualify for up to a 20% savings on your taxes. In order to qualify for the VAT refund, you must show that you rented your property professionally for 20 years and showed a profit.
In some cases, this only counts as a back tax, and you will have to pay the gross price and then claim the back tax at a later date.
However, sometimes this is not necessary, and the developers will actually offer you the discount up front, when you buy the property, and you need only pay the net price up front.
VAT
With the 20% discount, you will have the opportunity to claim all or part of the VAT.
If you decide that you would like to take advantage of the VAT rebate, you can rent your property to those on holiday and then pay taxes on the income you make from rentals. The interest you pay on that home’s mortgage will then be written off against your profits, and 10% of your furniture costs can also be written off as depreciation–from the wear and tear of renters.
11,000 Euro Exemption
There is an 11,000 Euro exemption, too, that you may qualify for. If you rent to those on holiday and pay your taxes in Austria, then you are eligible for an 11,000 Euro exemption each year, per person. If you claim the VAT back on your purchase, you are required to be VAT registered for 20 years, but after that, you can deregister.
Make sure that you are charging a VAT of 10% on your rentals, too, as this can be reclaimed each quarter. It is a good idea to have a local tax adviser help you with this and all tax returns.
Taxes
There are several taxes that should be taken into consideration when purchasing an investment property for sale in Austria.
These include the Tourism Tax, a Capital Gains Tax and an Inheritance Tax.
The Tourism Tax is charged to guests when they rent your property. The rate varies from 80 cents to 3 euros, per night, for each guest over the age of 14.
The Capital Gains Tax is 25%, and it applies to any profits you have made on your property. This tax helps to keep housing prices in reach.
And finally, the Inheritance Tax no longer applies, as it was abolished in 2008.
