Understanding and anticipating property taxes when buying a property

Property tax is a local tax levied by the municipal government and must be paid by each property owner. The amount of the tax changes every year, depending on the decision of the municipalities. A future buyer of real estate should take into account that he/she will have to pay it, even if he/she is the only owner of the land, because, by law, the property tax is paid by anyone who owns any kind of real estate - land, house, apartment, office building or warehouse. Find out what property tax is, how much it is and who can be exempted.

Property tax

Property tax is one of the local government taxes, the proceeds of which go to the budget of the municipality where the property is located. The rates vary greatly from one municipality to another. They are determined by the councils of some municipalities, but increases cannot exceed the maximum property tax rates determined each year by the Minister of Finance.

In accordance with the law of 12 January 1991 on local taxes and duties, the tax is subject to :

Taxpayers are natural persons, legal persons, as well as organizational units, including corporations without legal personality.

The tax base is :

Buildings are subject to property tax from the following year after the completion of construction, which means that the tax liability for a house whose construction was completed in December 2020, for example, will appear on 1 January 2021. On the other hand, if the construction was completed on January 1, 2021, the tax liability will appear on January 1, 2022.

It should be noted that, according to the Construction Act, a construction is completed when the investor notifies the competent construction supervisory authority of the completion of the construction and the latter does not object within an appropriate period of time.

The obligation to pay property tax is incumbent on all persons who own real property, i.e. :

Property tax should not be confused with real estate sales tax, which is paid as an income tax.

It is also important to remember that property taxes for an apartment must be paid by the owner and not the tenant of the premises, which is often an unclear issue.

See also: How much does it cost to maintain a house?

Property tax exemption

Owners of certain properties are exempt from taxation.

Property taxes should not be paid by homeowners:

All other property is taxable and the tax must be paid by both individuals and businesses (property tax rates for businesses are higher).

Property tax rate

The amount of property tax for a given year is determined by the municipal council. Therefore, you should check with the municipality where the property is located to find out the amount of contributions.

In most cases, tax is paid quarterly. There is a one-off payment only if the tax amount does not exceed 100 euros.

Property tax rates in 2021 will likely be twice as high as last year, due to rising inflation.

 

When you're about to buy a property, it's important to understand all the charges you'll have to face. One of the most important taxes to consider is property tax, which is payable each year by the owner of the property. The amount of this tax depends mainly on the location of the property and its cadastral rental value. This tax can be high in certain regions, but there are also possible exemptions. To help you plan ahead, let's take a look at how this tax works and the criteria used to calculate it.