Hello everyone,
I am new to this forum and hope to get some good advice from you.
About 2 years ago, my partner and I decided that we want to build a house. Unfortunately, none of the existing houses we looked at are suitable for us.
Over the past 2 years, we have visited several model home fairs and have already looked at some developers.
Now there is a new residential area in our town where we have a tough choice:
1. A 500 sq m (5,382 sq ft) plot with a play street on the north side (18 linear meters (59 feet)), neighbors to the west and east, and a green belt to the south. Unfortunately, we can only get this plot if we build with the developer, about whom we could hardly find any information online except their website. That makes us somewhat hesitant. We have already received and carefully studied the building and performance specifications. In a meeting yesterday, almost all of our concerns were dismissed. This is an offer for a detached urban villa with about 130 sq m (1,399 sq ft) of living space, a basement, and a 3 x 9 m (10 x 30 ft) garage.
2. At the same time, we have also independently applied for a plot in the desired new development. We were offered a 400 sq m (4,306 sq ft) plot with play streets to the south (27 linear meters (89 feet)) and east (15 linear meters (49 feet)), with neighbors to the west and north. Basically, we do not mind the smaller plot because we do not want a large garden and would have less maintenance (we are both working and often do overtime). The plot is naturally also cheaper to acquire. Our concern here is simply the larger maintenance effort for the street, such as winter work, hedge trimming, etc. We would probably handle the construction through a well-known and repeatedly recommended architect. Whether this will be cheaper than building with the developer is still uncertain.
So, this turned out to be a bit longer than I intended. But I hope some of you will take the time to read it and support us in making our decision with your comments.
Have a nice day
Teufelchen1985
I am new to this forum and hope to get some good advice from you.
About 2 years ago, my partner and I decided that we want to build a house. Unfortunately, none of the existing houses we looked at are suitable for us.
Over the past 2 years, we have visited several model home fairs and have already looked at some developers.
Now there is a new residential area in our town where we have a tough choice:
1. A 500 sq m (5,382 sq ft) plot with a play street on the north side (18 linear meters (59 feet)), neighbors to the west and east, and a green belt to the south. Unfortunately, we can only get this plot if we build with the developer, about whom we could hardly find any information online except their website. That makes us somewhat hesitant. We have already received and carefully studied the building and performance specifications. In a meeting yesterday, almost all of our concerns were dismissed. This is an offer for a detached urban villa with about 130 sq m (1,399 sq ft) of living space, a basement, and a 3 x 9 m (10 x 30 ft) garage.
2. At the same time, we have also independently applied for a plot in the desired new development. We were offered a 400 sq m (4,306 sq ft) plot with play streets to the south (27 linear meters (89 feet)) and east (15 linear meters (49 feet)), with neighbors to the west and north. Basically, we do not mind the smaller plot because we do not want a large garden and would have less maintenance (we are both working and often do overtime). The plot is naturally also cheaper to acquire. Our concern here is simply the larger maintenance effort for the street, such as winter work, hedge trimming, etc. We would probably handle the construction through a well-known and repeatedly recommended architect. Whether this will be cheaper than building with the developer is still uncertain.
So, this turned out to be a bit longer than I intended. But I hope some of you will take the time to read it and support us in making our decision with your comments.
Have a nice day
Teufelchen1985
Bauexperte schrieb:
You should quickly forget Musketier’s response regarding tax savings/performed services/building contract because it is not correct. As the final customer, you always pay the full VAT included;This is incorrect. Transactions subject to property transfer tax are exempt from value-added tax (VAT).
Bauexperte schrieb:
We are all obligated to provide you as a private customer with "gross" amounts.No one disputes that. Gross simply means the final amount, which you get from the developer. For a developer, net equals gross.
Since the developer cannot reclaim the VAT on subcontracted services and purchased materials from the tax office, the developer must include the gross amount (including VAT) as a cost in their calculation. Naturally, this cost is passed on to the end customer. However, no VAT must be paid on the developer’s actual profit and in-house labor. You can trust a tax expert on this. 🙂
To illustrate with an example calculation:
Subcontracted services from subs €100,000 + €19,000 VAT
Materials €50,000 + €9,500 VAT
In-house labor €50,000
Profit €20,000
Land value €100,000
Developer’s calculation
Subcontracted services €119,000
Materials €59,500
In-house labor €50,000
Profit €20,000
House price €248,500
+ Land €100,000
Total price €348,500
+ Property transfer tax (5%) €17,425
= Total cost €365,925
Calculation for general contractor (GC)/main contractor (MC)
Subcontracted services €100,000
+ Materials €50,000
+ In-house labor €50,000
+ Profit €20,000
= Net amount €220,000
+ VAT €41,800
= Price for end customer €261,800
+ Land €100,000
+ Property transfer tax €5,000
= €366,800
The higher the property transfer tax (3.5–5%) and the greater the share of subcontracted work, the more advantageous the GC/MC or architect model becomes.
B
Bauexperte14 Nov 2012 09:56Hello,
Because the following:
Kind regards
Musketier schrieb:Oops, sorry! That’s what happens when I answer “on the fly”... :-( It should have said, “You’d better forget it quickly, because it doesn’t change much for you. And that coming from me, a trained accounts receivable/payable clerk :o
You can definitely trust a tax expert sometimes. 🙂
Because the following:
Musketier schrieb:is the crux of the matter 😉
The higher the property transfer tax (3.5-5%) and the more services provided by subcontractors, the more it makes sense to go with the general contractor/prime contractor/architect approach.
Kind regards
T
Teufelchen198514 Nov 2012 11:16Hello everyone,
First of all, I would like to sincerely thank everyone who is participating in this discussion. Our decision is becoming clearer step by step...
Below are my answers to the questions directed at me:
It is located in NRW (Lower Rhine region)
Unfortunately, the plot in question was not disclosed to us by RAG. And at the time of allocation, we did not receive it, although it was on our wishlist. Well, now RAG has offered us some other plots, where the reservation fee apparently was not paid. In our opinion, the best option is the one described as Variant 2.
For example, the description stated that the client is responsible for setting up the construction fences. Allegedly, we can remove this from our list because the structural shell company would cover that. Another example concerns the downpipes.
It is basically a shared street leading to the other 12 plots and ends in a turning circle. So probably not much pedestrian traffic.
The plot is sold by RAG, and the building company acts as a “mediator” here. Does the property transfer tax also apply to the house in this case? That’s not how it was calculated for us so far!
Best regards
Teufelchen
First of all, I would like to sincerely thank everyone who is participating in this discussion. Our decision is becoming clearer step by step...
Below are my answers to the questions directed at me:
Bauexperte schrieb:
Where is this new development?
It is located in NRW (Lower Rhine region)
Bauexperte schrieb:
A common issue – often interested buyers can purchase the plots directly from the municipality because they were only reserved and not actually bought by the building company!
Unfortunately, the plot in question was not disclosed to us by RAG. And at the time of allocation, we did not receive it, although it was on our wishlist. Well, now RAG has offered us some other plots, where the reservation fee apparently was not paid. In our opinion, the best option is the one described as Variant 2.
Bauexperte schrieb:
What concerns were there and how were they resolved?
For example, the description stated that the client is responsible for setting up the construction fences. Allegedly, we can remove this from our list because the structural shell company would cover that. Another example concerns the downpipes.
Bauexperte schrieb:
What new plantings does the municipality require? And how much of the linear meters are actually used by pedestrians?
It is basically a shared street leading to the other 12 plots and ends in a turning circle. So probably not much pedestrian traffic.
Bauexperte schrieb:
Regarding the applicable property transfer tax, 5% on the plot and house with the building company, and secondly
The plot is sold by RAG, and the building company acts as a “mediator” here. Does the property transfer tax also apply to the house in this case? That’s not how it was calculated for us so far!
Best regards
Teufelchen
B
Bauexperte14 Nov 2012 11:46Hello,
If the building supervisor only "mediates" the plot of land to you if you build with them, a 5% property transfer tax always applies! Always!
Best regards
Teufelchen1985 schrieb:In my area :-)
It is located in NRW (Lower Rhine)
Teufelchen1985 schrieb:In the end, after signing the contract, only the construction description (CD) counts, and the rule everywhere is: what is not stated in the CD is considered not purchased! This means that if the provider promised you something, it must also be documented in writing, otherwise you lose out.
For example, the description mentioned that the client is responsible for setting up the construction fences. Allegedly, we could remove this from our list, since it would be covered by the shell construction company. Another example is the downpipes.
Teufelchen1985 schrieb:Then it is not a builder but what is called a building supervisor, and you can – sorry Musketier, although you are obviously right here :-) – completely disregard his statements.
The plot is sold by RAG and the builder acts as a "mediator." Does the property transfer tax then still apply for the house as well? This is how he calculated it for us so far!
If the building supervisor only "mediates" the plot of land to you if you build with them, a 5% property transfer tax always applies! Always!
Best regards
I think it partly depends on the contract arrangement. If the land purchase agreement states that you must build exclusively with a specific construction company, or if the RAG pays brokerage fees, then property transfer tax is definitely due.
If there is no legal relationship between the RAG and the construction company, and the construction company is not mentioned in the land purchase agreement, and several weeks pass between the land purchase agreement and the construction contract, then the tax office must first prove that property transfer tax applies.
If there is no legal relationship between the RAG and the construction company, and the construction company is not mentioned in the land purchase agreement, and several weeks pass between the land purchase agreement and the construction contract, then the tax office must first prove that property transfer tax applies.
H
Häuslebauer4014 Nov 2012 12:32Musketier schrieb:
If there is no legal relationship between the developer and the construction company, and the purchase agreement for the land does not mention the builder, and then a few weeks pass between the land purchase contract and the construction contract, the tax office must first prove that property transfer tax applies.They can do that. At least, they will try very hard. Since you are a professional and tax offices vary, I can only speak for our local one. There, half a department is dedicated to reviewing, identifying, and archiving newspaper ads nationwide that promote "land and house" packages from a single source, figuratively speaking. These are then cross-checked against incoming land purchases. Anyone who thinks they can avoid property transfer tax on the full amount with a dubious contract setup is seriously mistaken or will have to pursue legal remedies because the tax office sticks to its position. Fortunately, this never happened to me because I carefully ensured a clear separation, but some neighbors in our building area experienced exactly this. 😉