Hello everyone,
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
B
Bauexperte6 Jan 2015 09:28Hello,
Regards, Bauexperte
ductom81 schrieb:First, you should hire a professional appraiser to assess the property; this way, you will know its value as well as any potential renovation or repair costs. Additionally, you are legally required to provide a potential buyer with an energy certificate.
What is the best approach here?
ductom81 schrieb:Through careful and forward-looking negotiations with the buyer, which should also be legally documented by a notary.
How do you coordinate selling your own house with starting a new project?
ductom81 schrieb:You should discuss this with your trusted bank or an independent mortgage broker, as well as with your tax advisor.
What are the options to handle this financially in the smartest way possible?
What risks are involved?
ductom81 schrieb:I have no idea what you might be referring to.
What does "property exchange" mean in this context, for example?
ductom81 schrieb:According to the Taxpayers’ Association, the sale of a property used exclusively as a private residence is tax-exempt.
The property was continuously owner-occupied (no speculation tax?).
Regards, Bauexperte
Regarding the "property exchange": You might be able to transfer your existing financing to the new property (i.e., the collateral property is exchanged). However, this is somewhat more complicated for new constructions since there is usually only a limited "value" available (possibly just the land).
Bauexperte schrieb:
Hello,
First, you should hire a surveyor to assess the property; this will give you an understanding of its value as well as any potential renovation or repair costs. Additionally, you are required to provide an energy performance certificate to a prospective buyer.
This should be handled through smart and forward-looking negotiations with the buyer, which should also be formally documented by a notary.
You should discuss this with your trusted bank or an independent mortgage broker and your tax advisor.
I have no idea what you might mean.
According to the Taxpayers’ Association, the sale of residential property used exclusively as a private residence is tax-free.
Regards, BauexperteWhat exactly do you mean by smart and forward-looking negotiations with the buyer?
How much does a full survey including the energy performance certificate cost?
H
HilfeHilfe6 Jan 2015 11:52ductom81 schrieb:
What exactly do you mean by smart and forward-looking negotiations with the buyer?
How much does a full appraisal including an energy certificate cost?Smart means not selling below value. If you are dealing with the sale, I would involve a real estate agent. The commission is usually paid by the buyer anyway.
The "security exchange" or "property exchange" could be interesting for you to avoid paying an early repayment penalty. However, your mortgage lender must approve this, and it has to make financial sense (comparing the remaining loan interest rate with a new rate).
You definitely have a challenge balancing construction time versus the sale. You should carefully consider which timeframe works best for you. After all, you don’t want to stay in a hotel. For the net proceeds from the sale, you can arrange bridge financing with the bank.
B
Bauexperte6 Jan 2015 11:56Hello,
You have to sell the house but then you have no place to stay; a semi-detached house usually doesn’t allow for temporary subletting anyway. So you either need temporary accommodation or you negotiate with the buyers for the property to be handed over only after completion. The latter is usually not easily accepted by buyers unless they are investors; people who buy typically want to move in as soon as possible. Another option could be that you pay rent... and so on and so forth. The key is to find a workable compromise for both parties and finalize it in the purchase agreement. You also need to negotiate just as wisely with the financing bank regarding commitment fees.
Regards, Bauexperte
ductom81 schrieb:Think about it...
What exactly do you mean by smart and forward-thinking negotiations with the buyer?
You have to sell the house but then you have no place to stay; a semi-detached house usually doesn’t allow for temporary subletting anyway. So you either need temporary accommodation or you negotiate with the buyers for the property to be handed over only after completion. The latter is usually not easily accepted by buyers unless they are investors; people who buy typically want to move in as soon as possible. Another option could be that you pay rent... and so on and so forth. The key is to find a workable compromise for both parties and finalize it in the purchase agreement. You also need to negotiate just as wisely with the financing bank regarding commitment fees.
ductom81 schrieb:I have no idea what that costs in Berlin; just ask a trusted energy consultant or inspector. You can find one through the directory of independent experts. In North Rhine-Westphalia (NRW), both together would cost roughly €1,000 to €1,500 at most.
How much does a full inspection including an energy certificate cost?
Regards, Bauexperte