Questions about the calculation of equity / assessment of incidental purchase costs

I honestly don’t understand what that has to do with our situation. The grandmother would give us the property as a gift so that we can build on it. No idea what that has to do with tax avoidance or something similar. As far as I know, that is probably not illegal, why should it be. Assets are inherited, that’s completely normal. If gift tax or something similar applies, then we will pay it. But if after all the considerations we find that this property ends up being expensive, then we will leave it. Because due to its location, we would have to make compromises that could only be offset by saving money and interest. If the whole thing then becomes really expensive because of some taxes or something, then it doesn’t make sense anyway, then we could just buy something in the city at some point. Can anyone say anything about my original questions?

I did not know that the degree of kinship is also decisive for the real estate transfer tax. Thanks for the hint.

Exemption from real estate transfer tax according to §3 No. 2 Real Estate Transfer Tax Act in the case of a gift or §3 No. 6 Real Estate Transfer Tax Act in the case of a sale

1. Normally, additional purchase costs would be added when buying a property, which are apparently calculated as a percentage of the purchase price. How is it if it is a gift? What do the land registry office and notary receive then? The broker fee would be waived. How is the real estate transfer tax calculated then?

2. For the house financing, we will be able to pay the additional purchase costs with equity. Probably not more than that. But I don’t know exactly how much additional purchase costs will still be incurred? Broker and land registry entry would be waived. Are there still notary and real estate transfer tax costs? The house will cost about €230,000–250,000 (small bungalow without basement and frills).

Notary fees and costs for the land registry still apply for the transfer by gift and for the mortgage entry. Real estate transfer tax should be exempt as already mentioned.

3. So let’s say we then have about €30,000 liquid funds for the additional purchase costs and equity of €40,000 (or €90,000? How much does the bank assume here? The low official land value or the actual market value?), how is this equity credited? It is not liquid, it would only be security for the bank. Does this form of equity change the lending value? Or can one hope for a better interest rate with it? Or would we still be at full financing?

Which value the bank applies to the property you will have to ask the bank. Probably something between €40,000 and €90,000. The property counts as equity just as much as used liquid funds.

I really have a knot in my head right now and often only find general statements on the internet. We are currently roughly calculating. In any case, I would just like to know roughly what we need to have saved by then. Thanks in advance!

Take a look at the thread:



I think you don’t have to calculate much differently except that you can ignore the real estate transfer tax.

Thank you for your reply. I will take a closer look at the thread.

But I don’t understand how that is supposed to work. The land value is not something I can actually pay anything with. I cannot transfer its value to a construction company; it’s not cash, and I don’t actually have that value at my disposal. It would rather be a security for the bank. So if you have such a piece of land, what does it actually bring you for the construction financing, what does it concretely bring you? Lower interest rate? Lower loan-to-value ratio?

The notary fees and costs for the land registry entry are then also based on the actual value (whether the standard land value or market value)?

Thank you for your answer. I will take a closer look at the thread.

But I don’t understand how that is supposed to work. The land value is not something I can actually use to pay for anything. I can’t transfer that value to a construction company, it’s not cash and that value is not really available to me. It would rather be a security for the bank. So if you have such a piece of land, what does it actually bring you for the construction financing, that is, what does it concretely bring? Lower interest rate? Lower loan-to-value ratio?

You make a breakdown

Land costs/value
+ ancillary purchase costs
+ turnkey construction costs (usually without painting/flooring work)
+ painting/flooring work
+ additional construction costs
+ outdoor facilities
+ garage/carport
= total costs
less used equity (liquid funds)
less existing land
less value of own work
= financing debt to be taken

You see, whether the land is already available and therefore liquidity is lower or liquidity is higher and the land still has to be purchased does not matter.
You just must not leave it out, otherwise the calculation of the loan-to-value ratio will be wrong and the interest rate will be higher.

The higher the bank values the land in your case, the lower your loan-to-value ratio is.

Notary fees and costs for the land register entry are then also based on the actual value

Yes.

But I don't understand how that is supposed to work. The property value is not something I can actually pay with.

However, the bank can realize it in case of emergency, which is why it is included in the determination of the loan-to-value ratio.