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Real estate contract
12.Mar.2013, 05:27 PM
I am new here in Sweden and would need some help in a property purchasing contractual matter...
I thank in advance If someone would know about it, or at least to what kind of organization or place I could go in order to get more information.
Here it goes:
I am from the EU and moved to Sweden this month. I would like to buy a flat with my brother (who is permanently living in Sweden).
I have the 50% capital for the flat and my brother would need to get a loan for the other 50%.
Of course, if I would be already resident and had my job transfered fully to Sweden I believe I could apply for a Swede bank loan and all is fine. My brother would share (pay me a rental for his part) and we are fine.
Problem, is that I do not wish to change my work (which I can do it by distance, no need of living in the office´s country)
In case my brother needs to take a loan, who in fact becomes the "owner" of the property in a contract? (I guess the ownership contract needs to be in his name so he can get the bank loan).
In that case how can we guarantee that I am "shown" as 50% owner? Is there any kind of contract that must be made between us? Or is there a contract of shared ownership? If there is, would the banck accept it?
In case he doesnt pay his part/loan (who knows nowadays how the job market and economy goes...) the bank would lastly take the property... And the 50% I put in it.
Seems a "more common" subject than I thoguht. Would be the same case for couples buying the first flat together, ownership rights x obbligations, etc?
Still I am stuck with my doubt here.
Thank you a lot!! Any tip welcome.
12.Mar.2013, 06:20 PM
Well, some basic facts are that non residents can buy houses and houses can be in joint ownership, normally 50/50. I speak as a non resident owning a cottage jointly with my wife. In the simplest case, I see no problem with one being resident, and one not. Simply the tax folks give the non resident a dummy person number so that they still pay their 50% of the property tax. They hold the non residents non Swedish address for communication purposes.
However what you say about living in Sweden while earning money abroad is unclear. If you plan to stay longer than 3 months you must register, and there is no way you can live in Sweden but claim that you are working for someone in a foreign country and earning elsewhere without declaring and paying tax in Sweden. Or are you going to live less than 50% of the year in Sweden. Clarify that and someone can give an opinion on the loan no more than 50% of value (feasible in principal ?).
13.Mar.2013, 10:59 AM
However what you say about living in Sweden while earning money abroad is unclear. If you plan to stay longer than 3 months you must register, and there is no way you can live ... (show full quote)
The initial principle is that being resident in Sweden means liability to pay income tax on Global income. You may also open yourself up to the liability to pay the employers social costs, depending upon how things are structured and what agreements between the countries exist. In addition to that you may be opening yourself for double taxation, again, depending upon what agreements exist between Sweden and the country the company is in and their tax rules etc...
Whilst there is a 6 month rule, do not be certain that coming to Sweden to reside for 6 months of the year will release you from the Global income tax liability, there are potential arguments to state that effectively you are resident for tax purposes since, not only are you coming for 50% of the time you have economic ties to Sweden in the form of a property, which opens the door for the tax authorities to state that you work from Sweden on a regular basis, you live in Sweden on a regular basis, you have property (a home) in Sweden and therefore economic ties to Sweden ...everything points to the fact that you are effectively a Swedish Resident.
So income tax is on global income.
As for purchasing the property, since you would be joint owners, for the other party to borrow from the bank it will take both parties signatures, because the security for the loan will be the property itself. Note, if your other half gets into financial difficulty and the bank wish to recover outstanding loan monies, they would be able to take the property and sell it ...you potentially lose your investment, since there is no obligation for the bank to sell at market value, they only need to sell at a value that recovers the outstanding debt.
14.Mar.2013, 11:34 AM
Hello Johno and Yorkshireman!
Thank you so much! Clarifying:
Good point, I am buying the property but it does not mean, by any chance that I will be fully living in it. In this case, it is more that my brother will do so. His rental is so HIGH that I had this idea to help him so he can pay for an asset instead of pay rental to someonelse. And, of course, I can stay the time I need or wish to visit this wonderful country.
I travel quite lot. I think I pay enough taxes (straight from the source) in my home country. So, I think in this global taxation process the taxation on source is considered- Anyway, I do not wish to be registered or live permanetely in Sweden. At this time of the year, I have more "flexible time" and would stay "longer" in Sweden (I still have my own place, my own address elsewhere than Sweden) and in fact I am always elsewhere than home.
Ok, thank you for that point. I forgot that the bank need the guarantee and it is more probably that will be the initial capital that I am putting! Right. Yes I am taking the risk of flat being sold under market valu, but I never saw a flat beeing sold 50% or less than "paid market price". Oh, I wish so, unbelievable expensive housing in Sweden.
How a contract of onwership is made? The Stockholder society of the building should issue a document where it says that 50% of shares are mine and 50% my brother´s?
Will the bank give him the 100% of loan of his 50%?
Should I discuss this with a bank person? Or is there other place to ask for advice? (I asked to a real estate person but it was unclear, probably language issues;).
Thank you so much!
14.Mar.2013, 11:58 AM
I am assuming that you are talking about a Bostadsrätt, if that is the case then it is the seller that is selling you the shares (that give the right to live in the apartment), and in that purchase contract it should be stated that the ownership is 50/50. The real estate agent will fix the paperwork for You according to wishes
The BRF will also want to credit check the both of You, though that is normally a formality, since they have to have extremely good reason to prevent the purchase.
The bank will want to do their own assessment of your brothers ability to finance his part of the purchase, they will take into consideration the 50% capital from You, but they will still do a credit check and their own wonderful calculations as to ability to pay. Ultimately it is up to them.
Remember, with a Bostadsrätt one still has to pay a monthly fee to the BRF, so your brother will need to calculate the bills, monthly fee + interest (& amortisation?) that he will need to pay each month. Since the loan would be roughly 50% of the property, then it is likely to be lower than whatever rent he is paying ...but not always! (check), especially with rents being controlled to lower levels etc...
Talk to the bank beforehand, ask about the possibilities of what you want to do, and what (if any) limit they would put on your brothers borrowing capacity (like a promise they will lend x amount) ... so that you know in total what price apartment you would be able to buy ...then the rest of the bank work is just administration. Saves you puting in an offer, then having the loan possibly refused.
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