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“Housing and construction offensive” economic stimulus package

Tax Flash - 22 Mar 2024 | 6 minutes read

Both the measures planned in accordance with the Council of Ministers’ presentation and those already adopted are presented below.


Tax measures:

Temporary increase in the deduction for wear and tear (depreciation) for residential buildings

(Status of the legislative resolution from 20/03/2024)

Since 2020, it has been possible under certain conditions to apply three times the value of the depreciation allowance (AfA) for buildings in the year in which it is first taken into account. In the second year, double the value can be recognised (Section 8 (1a) EStG)

For residential buildings that are completed after 31 December 2023 and before 1 January 2027, it is now planned to claim three times the depreciation in the first three years. In contrast to the general rule of only being able to claim half-yearly depreciation when the building is commissioned in the second half of the year, the full annual depreciation can always be used as the basis for the triple depreciation when using accelerated depreciation, regardless of the time of commissioning.

This only applies to residential buildings that meet at least the “bronze building standard” in accordance with the “klimaaktiv criteria catalogue in the current 2020 version” based on OIB Guideline 6, OIB-330.6-026/19, issued by the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology.


Improved depreciation options for refurbishment measures

(Status of the legislative resolution of 20/03/2024)

The expenditure for the construction of a building must be amortised over the (remaining) useful life of a building. § Section 28 (3) EStG already provides for accelerated amortisation over 15 years for certain construction expenses: Expenses pursuant to sections 3-5 MRG, certain subsidised production expenses, expenses based on the Monument Protection Act.

Accelerated depreciation is extended to expenses for which a federal subsidy is paid out in accordance with Section 3 of the Environmental Subsidies Act. Expenses can also be depreciated at an accelerated rate if no subsidy was paid out but it can be plausibly demonstrated that the conditions for utilising the subsidy were met. How such plausibility checks are to be carried out is to be regulated by ordinance.

Accelerated depreciation applies to expenses incurred after 31 December 2023.


Eco-surcharge for buildings

(Status of the legislative resolution of 20/03/2024)

As part of the eco-social tax reform, Section 18 para. 1 no. 10 EStG created the possibility for private individuals to partially claim certain building investments as special expenses.

For these refurbishment measures (thermal-energetic refurbishment and replacement of a fossil heating system with a climate-friendly heating system), landlords now also have the option of claiming 15% of the investment as a notional tax expense (eco-surcharge). The same investments are subsidised as for private individuals, specifically thermal-energy renovations and the replacement of a fossil fuel heating system with a climate-friendly one.

The eco-surcharge is only available for buildings let for residential purposes.

If business income is generated, the eco-surcharge is available for 2 financial years: for the financial year beginning after 31 December 2023 and the following financial year.

If income is generated from letting and leasing, non-capitalisable expenses in the calendar years 2024 and 2025 can also be used for the eco-surcharge. If the expenses are distributed over several years in accordance with the distribution provisions of Section 28 EStG, the eco-surcharge can be claimed either in the year in which the expenses are incurred or analogously to the distribution of the expenses.


Extension of the forecast period for hobby farming

(Status of the Council of Ministers presentation of 28/02/2024)

When renting out real estate, it must be examined as part of the so-called hobby test whether an overall surplus of income over income-related expenses can be achieved within a foreseeable period of time. The foreseeable period is currently 25 years for the letting of non-participating buildings and 20 years for the letting of owner-occupied houses and flats.

In order to take account of developments in recent years (high property prices and cost increases), both (forecast) periods are to be extended by 5 years each.


New taxes and levies by the federal states

(Status of the Council of Ministers presentation from 28/02/2024)

A constitutional amendment is to give the federal states more powers in the area of housing mobilisation. This will extend the possibilities of the federal states to levy taxes and charges (recreational housing, secondary residence and vacancy taxes).


Abolition of ancillary fees for owner-occupied homes

(Status of the legislative resolution of 20/03/2024)

The court fee for the registration of ownership of a property and associated liens will be temporarily suspended under the following conditions:

  • The building erected or to be erected on the relevant property is used to satisfy an urgent residential need of the (co-)owner to be registered.
  • The fee exemption for the registration of a lien only applies if more than 90% of the underlying loan is used for the acquisition, construction or renovation of a subsidised home (see above).
  • The corresponding legal transaction is concluded after 31.03.2024 and the application for entry in the land register is submitted in the period from 01.07.2024 to 30.06.2026.
  • Fee exemption is applied for in the land register application.

The urgent need for housing must be proven by submitting confirmation of the registration as the main residence and proof of the relinquishment of residential rights at the previous main residence. The evidence must be submitted at the same time as the land register application. In the case of the construction or renovation of the residence, the evidence must be submitted to the land register court within 3 months of handover (in the case of a residence that is already ready for occupancy) or completion (in the case of a residence that is yet to be constructed or renovated). However, this evidence must be submitted no later than 5 years after the registration of the ownership/lien.

If ownership of the property is relinquished or the urgent need for housing ceases to exist within 5 years of the above-mentioned dates (time of occupation/transfer/completion), the court fee must be paid retrospectively. These circumstances must be reported to the land registry court within one month of their occurrence.


Support measures:

Craftsman bonus PLUS

(Status of the Council of Ministers presentation from 28/02/2024)

A craftsmen’s bonus is planned, which will subsidise up to 20% (but a maximum of EUR 2,000) of craftsmen’s services per year and person.

Funding is to be provided for work actually carried out in connection with renovation, maintenance and modernisation measures as well as the creation of living space in private homes. Details will be regulated by a directive from the Federal Ministry of Labour and Economic Affairs that is still pending.

The funding period is to cover the years 2024 and 2025.


Housing construction offensive

(Status of the Council of Ministers presentation from 28/02/2024)

The federal government will make additional funds (EUR 1 billion) available to the federal states to promote the construction of rental flats and owner-occupied units. The subsidies can be accessed by non-profit or commercial property developers.

The flats built in this way are to be rented out for 50 years in accordance with the cost recovery principle or, in the case of owner-occupied flats, there is a 25-year “speculation period”.


Other subsidisation measures

(Status of the legislative resolution of 20/03/2024)

Subsidised loans: The federal government provides funds to the federal states so that they can grant loans of up to EUR 200,000 with a maximum interest rate of 1.5% p.a. to natural persons as part of the housing subsidy programme.

  • The subsidised loans can be used for the construction or renovation of residential buildings and can be granted by the federal states in 2024 and 2025.
  • The subsidised loans can have a maximum term of 30 years.
  • As part of the subsidised loans, anti-speculative measures (pre-emptive rights or absorption of profits) must be provided for the duration of the loan or for at least 25 years.

Increase in the housing umbrella: The funds for the housing umbrella (delogisation prevention, housing security and energy support) will be increased by EUR 60 million.

Special programme from the energy efficiency pot of the Environmental Support Act: For the years 2024 and 2025, a further EUR 50 million will be made available to promote thermal-energy renovations of residential buildings that are rented out according to the cost recovery principle.