Real Estate Transaction – What Costs Should You Expect?
When buying a new home or putting existing real estate up for sale, you must take into account various costs that are added to the transaction price. Some of these affect both the buyer and seller, while others concern the parties separately. Let's review the most important sources of costs to consider when making a real estate transaction.
Notary Fee
The most significant cost of a real estate transaction is the notary fee, which is calculated based on a table provided in the law, where a specific fee corresponds to a particular transaction value. It is important to note that since the authentication of a purchase and sale agreement is a two-party transaction, the fee must be paid by both the buyer and the seller. To this is added value-added tax.
For example, if the price of the real estate being purchased or sold is €100,000, the notary fee is €160.40 and since it is a two-party transaction, the total fee is €320.80, to which value-added tax is added. Additionally, you must also pay a state fee for registering the new owner in the land register. The rate of this fee depends on the transaction value, which in this example is €110.
Taking a Loan and Obtaining an Appraisal
If you need to take a loan to purchase real estate, you will typically need to order an appraisal for the property. The cost of an apartment appraisal service is on average €170, for a house €270. Appraisal service fees are uniform in the market, but you should certainly prefer some larger real estate agencies whose appraisals would be accepted by all banks. To optimize costs, it is certainly wise to get quotes from other banks in addition to your home bank when clarifying loan options, as loan terms can differ significantly.
Taking out a loan also involves a contract fee paid to the bank, which is usually 1% of the loan amount. In cooperation with larger real estate agencies, many banks also offer a 50% discount on the contract fee, and the appraisal can be up to 20% cheaper. When purchasing with a bank loan, you must also establish a mortgage in the notary's office in favor of the bank and pay the notary fee for setting up the mortgage and the state fee.
Advertising on Real Estate Portals and Broker Commission
When selling real estate, you must also take into account the cost of advertising on real estate portals. If you use the help of a real estate agency for the sale, this amount is already covered by the broker commission, which includes all costs related to the sale – advertising fees on real estate portals, advertising, professional photos, and time and travel costs for showing the property. Here too, it sometimes pays to prefer the services of large and well-known real estate agencies, as their teams include many brokers who work closely together, which helps find a buyer more profitably and quickly and reach the transaction.
Income Tax and Income Declaration
With a sales transaction, you must also take into account income tax, as the profit obtained from the sale of real estate is taxable. The exception is if you sell your home, i.e., your permanent residence, which does not need to be declared. Within two years, you can sell one residence tax-free. It is important that you be able to prove that it has been used as your home. Registration as a place of residence is not decisive in this regard, and the law does not stipulate how long you must have lived there.
If you want to sell two residences within two years, you must declare the second sale and pay income tax on the profit earned (the difference between the purchase and sale price), not on the entire sale amount.
Article source: Uus Maa Real Estate Agency
