On 20 March 2024, the National Council passed parts of the Housing Package legislation announced at the end of February. In view of high real estate prices and increased interest rates, the aim of the federal government is to boost housing construction and make it easier to purchase property for residential purposes. It also aims to address climate targets and support the creation of affordable housing by temporarily suspending the land register fee for the registration of ownership titles and liens.
What does the fee exemption mean, specifically for buyers?
From 01 July 2024, no land register fees will be charged for the registration of ownership titles and liens when real estate is purchased, provided that the purchase is made to satisfy urgent housing needs. This will only apply to purchase contracts entered into as from 01 April 2024 and the exemption will apply for a limited period of two years for the time being. However, it is important to note that the application to the land register court must not be filed earlier than 01 July 2024. Transactions which do not involve any consideration (inherited or gifted properties) or purchase agreements concluded before 31 March 2024 are not covered by the exemption.
The exemption from fees will apply up to an assessment basis of EUR 500,000 and may thus result in savings of up to EUR 11,500. If the property purchase price or lien exceeds an amount of EUR 500,000, the fee will only apply to theamount in excess of EUR 500,000. The exemption from fees will not apply to "luxury properties" with a purchase price of more than EUR 2,000,000; thus, fees are the same as before, i.e. 1.1% of the purchase price is charged for the registration of the title and 1.2% of the lien amount to be registered is due for the registration of the lien.
What are the requirements for the exemption from fees?
The central prerequisite for the exemption from the land register fee for the registration of ownership titles and liens is that the newly built or acquired residential property will be used by the owner and will serve to satisfy the urgent residential needs ofthe owner to be registered. This means that the exemption from fees only applies to natural persons.
Specifically, the urgent need for housing must be proven by a main residence registration and proof that the right to reside at the previous residential address has been relinquished. Such proof and the confirmation of residents’ registration must either be furnished when the application to the land register is filed or within three months of the transfer or completion of the property, but no later than five years from the land register entry date.
For the exemption from the land register fee to apply to a lien, it is required that more than 90% of the lien amount is used for the acquisition of the property or for the construction of the residential building on the land acquired.
What needs to be considered after the purchase?
Please note: If the ownership title is relinquished within five years from proof of residential use or if the urgent housing need ceases to exist, the exemption from payment of the fee will no longer apply and the fee will be imposed retroactively.
To what extent are refurbishment measures subsidised under the Housing Package?
The exemption from the land register fee may also be claimed for the registration of a lien irrespective of a real estate purchase if more than 90% of the amount is used for the refurbishment of the building located on the property. However, the building must also serve to satisfy urgent housing needs for the exemption to be claimed.
The Housing Package provides for tax incentives under the Income Tax Act in order to promote environmentally friendly new builds, refurbishments and a switch to eco-friendly heating systems. Accordingly, refurbishment measures subsidised under the Environment Promotion Act (UFG) will be eligible for accelerated tax deductions. In case of new residential buildings which are or were completed between 31 December 2023 and 01 January 2027 and meet the defined environmental standards, the triple depreciation rate may be applied for three years, which corresponds to an annual depreciation of 4.5%. Moreover, the Housing Package provides for tax benefits for thermal-energy refurbishments and boiler replacements fora limited period, i.e. the next two years; these benefits can be claimed as part of the "eco-surcharge" at a rate of 15% of the expenses to be taken into account for operating expenses or income-related expenses.
What other measures does the Housing Package provide for?
Apart from the exemption from fees and the refurbishment subsidies, one billion euros will be made available for subsidised housing construction. As adopted, the Housing Package also includes interest subsidies totalling EUR 500,000,000 to be used by the federal states for loans to promote housing construction by natural persons. In the years 2024 and 2025, the federal states may grant these in the form of subsidised loans of up to EUR 200,000 subject to a maximum interest rate of 1.5% p.a.
Our real estate law expert Caroline Lessky will be happy to answer any further questions you may have.