Procedure for purchasing land

Hello dear community...

I have been looking for a suitable property for my wife, child, and me for some time now.

Since a second little one is on the way, our 4-room apartment will eventually become too cramped because my wife needs a home office as a teacher.

Anyway, we have now found a plot of land in a small residential area that, unlike all the other plots in the settlement, is not sold by the city but by a construction company/architect.

The plot is currently about 2,200m2 and is to be divided into approximately 1,000m2 + 1,200m2.

I have already had an initial conversation with the architect, which was very relaxed and casual. I am currently positively impressed by what he told me. We plan to meet on the plot this week and then coordinate the next steps together with my wife.

I still have a few question marks and hope you can help me:

1. What do we need to consider before the purchase?
1.1 We know that drinking water/sewage and gas are directly available at the property
1.2 I have the development plan and know how and what can be built
1.3 I do not know if there are any contamination issues from past use (where can I find this out?)
1.4 I do not know if there are entries or encumbrances in the land register (it should be no problem to check this, right?)
1.5 The plot is directly on a slight slope and a small stream, approx. 50cm wide (there have been no transgressions in the past according to hearsay) – what do you think regarding the stream and the house?
1.6 I do not know about electricity and internet yet
1.7 Are there things I have overlooked or am currently not thinking of at all?

The only point that gives me an uneasy feeling is the statement that the company so far only had one family where the tax office demanded real estate transfer tax on both the land and the house construction after building. I had asked beforehand how it works if I also have my house built by the landowner, as I always understood that the real estate transfer tax has to be paid in full on everything.

I am grateful for any tips.

All this information should be provided to you unsolicited by the commercial provider. This is part of their basic services:

Excerpt from the register of encumbrances, current extract from the land register with proven subdivision, current development plan, soil report (foundation requirements, soil contamination, hydrological data/infiltration coefficient, requirements for building waterproofing), design groundwater level, statement from the lower water authority regarding flooding in this area, various statutes of the municipality/district that could have an impact, pre-emption rights of the municipality/district, proof of development costs or cost exemption, verified development with planning documents for the existing gas/electricity/water/sewage pipelines etc.

To assess the land situation and the fundamental freedom from encumbrances of the property based on the aforementioned documents, you should, if necessary, commission a publicly appointed and sworn expert for the valuation of land/properties or an independent architect to conduct the research.

In my opinion, the land sizes are exaggerated and nowadays uncommon. The real estate transfer tax should only be paid on the land and not on the building. The land sale should of course take place independently of the house construction and not be tied to a contract for the construction of a residential building with a general contractor/the architect.

Anyway, now it is such that we have found a plot in a small residential area which, contrary to all other plots in the settlement, is not being sold by the city but by a construction company/architect.

What gives me the only uneasy feeling is the statement that the company so far only had one family where the tax office wanted the real estate transfer tax on the plot as well as on the house construction after the build. I had asked beforehand how it would be if I also build my house from the plot owner, since I always knew that the real estate transfer tax has to be paid completely on everything.

Hello,

in this situation it is rather likely that you have to pay the real estate transfer tax on the complete package (i.e., plot and house).

Only one thing gives you certainty here: contact your responsible tax office and ask within the framework of a (fee-based) binding preliminary inquiry how the responsible tax office assesses the situation.

With that, you then have certainty regarding this not insignificant risk.

It is only important that you play with open cards in this preliminary inquiry – if you withhold relevant information or (even unknowingly) do not provide it, the tax office is no longer bound by the originally given statement.

It is also advisable to have a soil survey conducted before the purchase. With that, you should then be able to assess the risk of contaminated sites (usually commissioned separately) and water damage caused by streams / groundwater or precipitation liquids.

Best regards,

Dirk

Hi,

1.1: Is it directly on the property - and later on both? Or are they one behind the other? Development costs...

1.4: We had a site plan and a positive preliminary building inquiry from the realtor (one property became three). For us, the statement that there are no building encumbrances / land register entries on the property was initially sufficient. Later, the notary obtained an extract and it was written in the purchase contract that it must be free of encumbrances in this regard.

1.7: We somewhat underestimated the notary costs, division costs, and surveying costs (1-2k EUR) compared to a "new building plot." But it certainly always depends on whether building encumbrances / land register encumbrances have to be recorded later.

1.X: For us, the real estate transfer tax was only due on the land. But the seller of the land was also not the house building company/architect. The notary contract explicitly stated that there is free choice there (although I don't know whether the tax office has access to that).

We also commissioned a soil survey in advance.

Greetings

Good evening everyone,

Thank you all for the quick and detailed responses.

We are meeting with the architect tomorrow and I will follow up on the extent to which it is possible for us to purchase the property completely separately in order to have freedom from developers and, of course, to be clear with the tax authorities. Furthermore, we will wait to see what information he can provide or demonstrate regarding contamination etc.

Regarding development costs, it is currently the case that the connections are supposed to be ready directly in front of the property (see attached picture – framed in red). The green separation could be a future division of the property. If I understand correctly, both properties then share a "connection node," right?

has already mentioned it. Regarding the property, you should have a soil survey conducted. This is also important for the later house construction, as the construction company can assess based on the report how it must work to ensure the house is securely founded. Usually, the report can also indicate whether you can build with a normal basement, with a white tank, or completely without a basement. The hint from regarding the local water authority is good. Here you have officially secured information about how the stream was in the past. BUT – this does not protect you from the future. You surely still remember 2002, when partly the smallest streams became raging torrents (I think that was in Vogtland). Regarding the real estate transfer tax, I see it similarly to . If the construction company owns the property and sells it to you, you will have to pay tax on everything. If someone else sells the property and it is only (exclusively) brokered by the construction company, you might possibly have a chance to avoid it.