The budget for purchasing a house or apartment will have to be revised upwards by buyers.
As the real estate market gradually begins to breathe with the decline in lending rates, the bad news could hit the wallets of future owners hard. To generate additional revenue for the state coffers, the idea of higher taxation on the purchase of houses and apartments has emerged in recent days. If initially the option was seen from afar, the government is becoming more and more interested in it and even seems to be in favor of this measure.
When buying a property it is not just the price of the property, the cost of credit or even the real estate agent’s fee that you need to factor into your budget. Additional expenses will have to be paid, those commonly called “notary fees”. However, these (tens of) additional thousands of euros do not go into the pockets of this professional. And the bill could increase starting January 1, 2025.
The “notary fees” are so called because they are paid at the notary’s office on the day of the final signing of the sale. But in reality the money is then distributed among several subjects: the department, the municipality and the State. Each community receives a different percentage of the purchase price, which it establishes itself. And it is precisely this rate that could increase in the coming weeks.
Departments are currently authorized to set a maximum rate of 4.50%. The vast majority of them apply it because it constitutes a significant financial windfall for their budget. In 2025, this maximum rate could rise to 5.50%. The proposal comes from several deputies and the government does not oppose it. This legislative change still needs to be adopted as part of the budget vote.
For a future owner this would represent an increase of €1,000 to €5,000 for the purchase of a property between €100,000 and €500,000. A “sustainable” increase for buyers and which could allow departments to collect a further 2.6 billion euros, while many revenues are about to decrease.
Interview between Time.news Editor and Real Estate Expert
Editor: Good day, and welcome to Time.news. Today, we’re diving deep into an emerging trend in the real estate market that could significantly impact future homeowners. We’re joined by Dr. Laura Williams, a renowned economist and real estate expert. Laura, thank you for being here with us.
Dr. Williams: Thank you for having me! It’s great to be here.
Editor: Let’s get right into it. Recent discussions suggest that future homebuyers may need to increase their budget by at least 1000 euros due to potential higher taxation on property purchases. What’s your take on this situation?
Dr. Williams: It’s certainly concerning for potential homeowners. The government’s push for increased taxation, aimed at boosting state revenue, could significantly burden buyers already grappling with rising property prices. For many, this could mean revising their budgets upwards even further.
Editor: Indeed. With this new burden, how do you think it will affect the overall real estate market?
Dr. Williams: A tax hike could slow down transactions in the market. Buyers who were on the fence may hesitate if they need to fork out additional funds for taxes on top of their purchase price, not to mention the cost of credit and notary fees. This hesitation could result in a cooling off of the hot market we’ve seen recently, despite declining lending rates.
Editor: Speaking of notary fees, can you explain to our audience how these fees play a role in the overall financial picture for buyers?
Dr. Williams: Absolutely. Notary fees can add tens of thousands of euros to a property’s purchase price, depending on the location and property value. These fees don’t go to the notary personally but are rather expenses imposed by the state, encompassing taxes and administrative costs. With the potential for higher overall taxation, buyers must be mindful that these fees could also increase.
Editor: Interesting! So it sounds like buyers might have to budget not just for the property but also for these hidden costs. Are there any strategies you would recommend for future buyers to navigate this challenging landscape?
Dr. Williams: Certainly. I recommend that future homeowners conduct thorough research and may even consider working with a financial advisor who specializes in real estate. It’s essential to have a complete understanding of all potential costs, including those lurking in the fine print, before making a commitment. Creating a contingency budget for unexpected expenses is also a wise strategy.
Editor: That’s valuable advice, Laura. As lending rates decline, do you see a disconnect between the affordability of homes and this new taxation policy, causing a potential strain on lower-income buyers?
Dr. Williams: Yes, there’s definitely a risk of widening the gap in property ownership. As taxes increase, lower-income buyers might find themselves priced out of the market, even with declining interest rates. It’s critical for policymakers to balance revenue generation with equitable access to housing.
Editor: Thank you for that insight, Laura. As a final thought, what do you believe the future holds for the real estate market with these dynamic shifts occurring?
Dr. Williams: It’s challenging to predict the exact direction, but increased taxation could lead to a more stagnant market as buyers reevaluate their budgets. However, if governments consider potential socio-economic impacts, we may see policy adjustments that balance revenue needs with promoting home ownership. It’s a delicate dance.
Editor: Thank you, Dr. Williams. Your expertise sheds light on an important and evolving issue that many will be following closely. We appreciate you taking the time to chat with us today.
Dr. Williams: Thank you! It was a pleasure discussing these vital topics with you.
Editor: And thank you to our viewers for tuning in to Time.news. Stay informed, and remember to check out our latest articles for more insights into the evolving world around us.