German Property Market – Rules, Regulations and Taxation

Legal Restrictions

There are no specific legal restrictions on cross-border real estate investments in Germany for foreigners. Normally a valid passport and an adequate capital will be sufficient to purchase property. It should be noted that private investors will not be given residential status merely by acquiring property in Germany, as is the case in some other European countries.

With regard to indirect real estate investments, however, some general rules apply. They are laid down in different laws and are binding for both foreign and domestic investors.

Ownership in Germany

The owner of a property is generally in possession of both the plot of land and any buildings upon it. The rights to ownership and inheritance are guaranteed by law.

If an investor acquires a single flat in a multi-family house, it is a matter of property ownership. However, this property ownership does not entail ownership of the land and building associated with the property. Instead the investors obtain a co-ownership share of the jointly owned property which the flat is a part of. 

According to private law, the owner …

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Property tax could help solve economic inequality

The 2020 Irish Budget, written by the Minister for Finance Paschal Donohoe, is likely to have some major changes implemented within the coming years. The Department of Finance has begun drafting multiple different variations of possible changes in taxation, many of which are targeted at the Vehicle Registration Tax. 

This proposed taxation would crack down on high CO2 emission vehicles and would possibly provide grants or tax breaks to owners of hybrid or fully electric vehicles. In this particular budget, there has been a substantial focus on the environment and upholding the Irish promises of maintaining and promoting environmentally friendly options.

Beyond just these changes, there has been mention of increasing property taxes in the hopes of having a more fair taxation system. The Nevin Economic Research Institute (NERI) notes that there is substantial income tax collection inequality and that an increase on home tax could be more beneficial in diversifying the collection of tax revenue. Additionally, a home value is usually more substantial than a person’s income, so applying a harsher tax on  property could bring in a more …

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Ireland vs US: Where your taxes go

In the article Ireland vs US: Taxation , some of the differences between government mandated income tax in Ireland and the United States were highlighted. With multiple differences in how taxation occurs in each country, there are bound to be variations in how these funds are utilized. 

Additionally, because the United States and Ireland are nations that differ significantly in size and population, the total budget and how much of that comes from tax dollars will contrast significantly. In 2017, Ireland’s total expenditure was €69.1 billion; the United States spent $4 trillion. These differences in total expenditure make sense in some ways, given that Ireland is home to 4.804 million people, while the United States houses 327.2 million. 

Ireland’s three largest areas of spending within that year are Social Protection, Health, and Debt Servicing/ EU payments. €20.12 billion, 29.11pc of the total spending, funded Social Protection. Social protection encompasses the funding of many social welfare benefits that you must be eligible for to receive. There are many categories that fall under the social welfare umbrella including disability and illness, …

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Ireland vs US: Taxation

The fourth of July is one of the most widely celebrated national holidays in the United States. In 1776 the Continental Congress declared that the 13 british colonies were to be free from the confines of British rule and would become a new, independent nation. Within the Declaration of Independence, there were 27 grievances against the current and former actions of King George III; Thomas Jefferson, an advocate for independence, wrote almost all of these. 

Grievance 17 focused mainly on taxation without representation, which to this day is still a widely supported part of the Declaration and Constitution. Although this outcome is supported by both US political parties, the amount of income that is taxed and what the taxed money is used for is highly contested.  

In the United States, taxation occurs at the local, state and federal levels. For income, the United States imposes a bracket system on the amount of income you earn. In 2018, the tax rate started at 10pc of total income until you were to earn above $19,050. Between the incomes of $19,050 and $77,399 …

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Skyrocketing Inheritance Taxes due to Increasing Property Prices

The exchequer reported an all time high collection from the inheritance tax which is one component in the capital acquisition tax (CAT). The amount recorded that was collected amounts to €466.3 million. The increase in revenue from the inheritance tax is due to increasing property prices and unchanged tax free thresholds. The revenue figure of inheritance tax collected depicts an increase in revenue by 10% in comparison to the collections in 2017. Inheritance tax collections comparatively increased by 48% in comparison to the Celtic Tiger era in 2007. This dramatic increase across the span of 10 years is due to the rising housing costs.

Over half of the inheritance tax was paid on the behalf of grandchildren, nieces and nephews who inherited upwards of €32,500 from relatives in 2018. The rapid growth in inheritance tax collection is due to another year of increasing property prices. Furthermore, the increase is due to the controversial unchanged tax free thresholds. Many people argue that these thresholds should be immensely increased. The tax free threshold for inheritances left to children was at its highest in …

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Fine Gael’s Tax Regime Under Scrutiny

Ireland is known throughout the world of having a very low corporate tax rate, which draws in many multinational companies. In addition, foreign property investment funds are also paying very low taxes and are walking away with massive profits. Many believe this is hurting the average taxpayer and are calling for an increase on taxes to foreign investors.

A main critique to this is the current housing shortage and how it may encourage less houses being built. However, this fund is buying large chunks of land and holding it to draw prices up and then selling these properties at premium prices. The housing shortage is due to the lack of affordable housing, not high-end luxury houses. Pearse Doherty, finance spokesperson, has been raising this issue publicly after he learned that only approximately 13 million Euros were collected on taxed profits out of the hundreds of millions that the companies earn. One of the tax loopholes that companies use is the Fine Gael’s tax regime. These loopholes allow them to avoid cooperation taxes on rental income and tax on gains if …

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How to design a wealth tax.

Wealth taxes are very popular in general, but not in particular because it usually means that asset ownership gives rise to taxation. One example of this would be property tax.

If ‘wealth’ is going to be taxed it has to be defined, the classical example is to use the accounting equation in which ‘assets minus liabilities equals capital’. The issue after that is where debt is involved because if you owned a home worth €300,000 and had debts on it of €200,000 then your ‘wealth’ is €100,000.

People could potentially try to game the system, it’s not as simple as getting indebted, if you had €300,000 in cash and then bought a property and remortgaged it to the hilt you’d still have to have €300,000 cash somewhere, so the issue becomes one of reporting and valuation.

This puts a weight upon the individual to make declarations and returns which people don’t like doing so a simplified process would be a good thing, where a person can provider a simple number of ‘assets minus liabilities equals wealth’ and file it online.

…

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TodayFM Last Word features Irish Mortgage Brokers and Joan Burton to discuss bank taxation

We took part in a conversation with Matt Cooper on The Last Word about bank taxation with Joan Burton from the Labour Party. We tried to make the point that short term thinking about bank taxation is a mistake, that we are better off getting the maximum amount of money back to the state rather than losing bank value in order to score a short term political win.

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The Housing Markets most Pressing Issue

Ireland’s “most pressing issue”…

The lack of housing.

Economist Philip O’Sullivan is reported as saying that tens of thousands more houses need to be completed annually to meet current demand. Why is it that there’s such a shortage of homes?

It is on schedule right now that 21,500 homes were built this year and 24,000 for next year. Though, a good number in the race to meet demand needs, it is nothing near the needed 30-50,000 homes being built to sufficiently meet the demand.

The society of chartered survey of Ireland has predicted that this housing crisis could continue for another 10 years. Paul O’donoghue, a writer for Fora sad that drastic measures need to be taken immediately to push for the development of homes.

With too little of homes available to meet demand, it is the law of supply and demand that says the price of the homes will increase as well. Equilibrium is expected to be reached by 2026.

This, falling in line with the prediction of the housing crisis to continue for nearly …

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