Transferring property to your children in Austria: Gift it or leave it in your will?
Author: Mag. Nevena Shotekova-Zöchling, Attorney and insolvency administrator in Vienna · Whether you gift your property during your lifetime or leave it by inheritance makes no difference to the real estate transfer tax (Grunderwerbsteuer) in Austria: within the family, in both cases the tiered rate (Stufentarif) applies – 0.5 % on the first € 250,000, 2 % on the next € 150,000 and 3.5 % above that, calculated on the property value (Grundstückswert) (§ 7 para 1 Z 2 GrEStG). There is no gift or inheritance tax in Austria. The difference lies in control, protection and the compulsory share (Pflichtteil).
Key facts
- In Austria, gifting and inheriting real estate within the family are taxed the same: tiered real estate transfer tax of 0.5 % on the first € 250,000, 2 % on the next € 150,000 and 3.5 % above that, based on the property value (§ 7 para 1 Z 2 GrEStG).
- Austria has no gift tax or inheritance tax; gift tax was abolished in 2008.
- Within the family, the 1.1 % land register entry fee is calculated on three times the assessed value (Einheitswert), but at most on 30 % of the value (§ 26a para 1 Z 1 GGG).
- Gifts to children are added back to the estate on request when the donor dies, without any time limit (§§ 781 f ABGB).
- A waiver of the compulsory share is only valid as a notarial deed or by court record (§ 551 ABGB).
What does the transfer cost?
Real estate transfer tax is based not on the market value (Verkehrswert) but on the property value (Grundstückswert). This is determined using the flat-rate value model (Pauschalwertmodell), the real estate price index (Immobilienpreisspiegel) or an expert valuation, and is often below the market price. Within the family, the land register (Grundbuch) entry fee of 1.1 % is calculated only on three times the assessed value (Einheitswert), but at most on 30 % of the value (§ 26a para 1 Z 1 GGG). This relief must be claimed in the land register application.
Worked example: Condominium apartment, property value € 300,000, market value € 400,000
| Item | Calculation | Amount |
|---|---|---|
| Real estate transfer tax | 0.5 % of € 250,000 + 2 % of € 50,000 | € 2,250 |
| Entry fee (maximum value) | 1.1 % of 30 % × € 400,000 | € 1,320 |
Acquisitions by the same acquirer from the same person within five years are aggregated for the tiered rate (§ 7 para 1 Z 2 lit a GrEStG). Gifting in instalments therefore usually brings no advantage.
Gifting: advantages and protection
With a gift (Schenkung) you arrange the succession yourself, at a time you choose. To remain protected, you can reserve rights:
- Right of residence (Wohnrecht): You may continue to live in the apartment.
- Usufruct (Fruchtgenuss): You may also rent out the apartment and keep the rental income.
- Prohibition on encumbrance and sale (Belastungs- und Veräußerungsverbot): Your child can neither sell nor encumber the apartment without your consent; when entered in the land register, it is also effective against third parties (§ 364c ABGB).
The downside: a gift is in principle final. Revocation is possible only in narrow exceptional cases, for example for gross ingratitude (§ 948 ABGB).
Compulsory share: don't forget the siblings
On your death, gifts to children are added back to the estate on request (§§ 781 f ABGB), without any time limit. The value is determined as at the time of the gift and adjusted to the consumer price index (§ 788 ABGB). Siblings who received less can therefore claim their compulsory share, which is half of the statutory share of the estate (§ 759 ABGB).
A remedy is a waiver of the compulsory share (Pflichtteilsverzicht) by the other children. It is only valid as a notarial deed (Notariatsakt) or by court record (§ 551 ABGB) and is often combined with a compensation payment.
No gift tax, but a reporting obligation
Gift tax was abolished in 2008. Gifts of real estate are not subject to reporting under the Gift Reporting Act (Schenkungsmeldegesetz), because real estate transfer tax is payable anyway. If, on the other hand, you give money or other movable assets, you must report this to the tax office within three months if the value between relatives exceeds € 50,000 within one year (§ 121a BAO).
Frequently asked questions
Is inheriting cheaper than gifting?
Usually not in tax terms. What matters is whether you want to create clarity now and reserve rights for yourself.
Does my child have to pay income tax after the gift?
The gift itself does not trigger real estate income tax (Immobilienertragsteuer). This can only arise on a later sale.
Can I give up my right of residence later?
Yes, by a declaration of waiver and cancellation in the land register.
We plan the deed of gift, reserved rights and compulsory share issues with you. The first consultation is free of charge.
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This article gives a general overview of Austrian law and does not replace advice on your individual case.