Vladimír Urbánek (Kurzy.cz)
Personal finance  |  February 13, 2013 15:07:13

COMMENTARY: Real estate transfer tax awaiting major changes


The Ministry of Finance is preparing a comprehensive change in real estate transfer tax.   The reason is forthcoming repeal of the estate and gift tax form and a new Civil Code. Under the proposal, the Ministry will in future tax paying buyer, not the seller. Moreover, the current proposal assumes that the price will be paid over the purchase price.

Newly sales would therefore look like this:

The apartment sold for one million crowns, the buyer will have to pay the price of the apartment in addition to another 40 thousand tax. The total cost of buying a property will do 1,040 thousand. The current arrangement is such that the buyer has paid one million crowns and the seller paid 40tis. tax.His actual profit thus amounted to 960,000.

Furthermore, the proposal envisages that the maturity of this tax is no longer 3 but only two months. To her payment but in most cases will not need an expert's opinion and the tax is paid to the selling price of the property. New transfer tax will not apply to new buildings in which the record date for the ability to use the property is older than two years. A similar proposal is true for example in Belgium, France, Germany, Hungary and the UK. Amendment to the Act would apply from 1 January next year.

Personally, I believe that the proposed modification is in form very unhappy. The problem arises in several places:

buying property will raise the price: the seller if it is not motivated to sell as quickly as possible,   will behave rationally and will in many cases, up to the maximum retail price. On the contrary, the buyer must reckon with the fact that he still expensive new property on the appropriate amount of tax. The apartment for 3.5 million for the not inconsiderable sum of 140,000 crowns.

advantage of new buildings: For new construction buyers will not have to pay property transfer tax, so they will be favored over older buildings. In many cases, older buildings are already more expensive than new construction, so the price difference is even more pronounced.  

increase mortgage: the buyer usually takes a mortgage to afford to buy your dream home. The question is whether the bank adjusts and allows an increase in mortgages on hundreds of thousands who will pay for real estate transfer tax.

decline in sales in more expensive real estate: tax transfer from the seller to the buyer's real estate market could get into a situation where more and more expensive properties are more difficult to counter, because their price is due to increase most.

The best solution would be to stick with the original model, when counting the tax from the purchase price and the amount the seller received tax free. The principle would remain the same, would change only entity making the payment.The very best solution would be to abolish the tax, as it planned the Ministry of Finance in 2010 (which at the time led by the same minister as today), as a tax on the transfer of taxes already taxed money and revenue from the tax to the state budget is crucial.

Daniel Kotula
owner
RE / MAX Center

 

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