Effective Tax Rate on Rental Income
|Click here to see a worked example|
Nonresidents are taxed on their Austrian-sourced income. Married couples are taxed separately.
Income is taxed at progressive rates.
|TAXABLE INCOME, €||MARGINAL TAX RATE|
|Up to €11,000||0%|
|€11,000 – €25,000||36.50% on band over €11,000|
|€25,000 – €60,000||
43.2143% on band over €25,000
|Over €60,000||50% on all income over €60,000|
|Source: Global Property Guide|
Taxable rental income is the excess of receipts over income-related expenses (werbungskoten). Expenses such as maintenance and repairs, depreciation, administrative expenses (including professional tax advice), interest payments and real estate tax are deductible.
Nonresidents suffer special penalties, the tax base of each nonresident individual being notionally increased by €8,000.
Stamp duty is levied on various transactions in Austria, including lease contracts. Stamp duty rates range from 0.8% to 2%.
Capital gains realized from properties which were acquired as of 31 March 2002 is subject to capital gains tax at a flat rate of 25%. Taxable capital gains are calculated as selling price less acquisition costs and related expenses.
After a holding period of 10 years, sellers may decrease the capital gain by 2% per year as inflation reduction, up to a maximum of 50% deduction.
Capital gains realized from properties acquired before 31 March 2002 are taxed at specific different rates, either a flat rate of 15% on sales price or a flat rate of 3.5% on sales price, depending on several conditions. Sellers may also choose to be taxed at a flat rate of 25% on the capital gains.
REAL ESTATE TAX
Property taxes in Austria are levied on the assessed value of real property, which is generally less than the prevailing market value. It is levied at a basic federal rate, multiplied by a municipal coefficient. The basic federal rate is generally 2% and the municipal coefficients range up to 500%.
The standard corporate income tax rate is 25%, which is levied on income and capital gains earned by companies. This rate applies to companies incorporated in Austria or foreign companies doing business in Austria.
Starting 2006, net rental income by nonresident individuals will also be taxed as business income at the tax rate of 25% if the property is part of his business abroad.
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