Imagine: you buy an apartment in Vienna, rent it out, and the government refunds you 20% of the purchase price as a tax deduction. Sounds like a dream? In fact, this is a completely real and legal scheme called Vorsorgewohnung — literally “an apartment for future provision.” In Austria, this is one of the most popular instruments for long-term investment and pension planning, especially among those seeking a stable alternative to bank deposits and the stock market. According to Raiffeisen Vorsorge Wohnung, the VAT refund when purchasing such an apartment can amount to €40,000 to €60,000, and the combination of tax benefits makes this model one of the most advantageous on the market.
At the same time, a Vorsorgewohnung is not “easy money.” It is a long-term commitment of at least 20 years, with a number of risks that developers are reluctant to discuss. In this article, we will honestly cover both the advantages and the pitfalls — with specific examples, figures, and references to official sources. If you are already familiar with property types in Vienna and understand the structure of additional costs when buying, this article is the logical next step in your understanding of the Austrian market.
What is a Vorsorgewohnung and how does it differ from a regular apartment
Vorsorgewohnung is a regular apartment (predominantly in a new build) that you purchase not for personal use but exclusively for renting out. The fundamental difference lies in your tax status: from the moment of purchase, you become an entrepreneur under the Umsatzsteuergesetz, and the apartment becomes your business asset. It is this status that opens access to significant tax advantages unavailable to ordinary buyers. In Austria, the term Anlegerwohnung (investment apartment) is also used — essentially the same thing, though Vorsorgewohnung emphasizes pension provision while Anlegerwohnung emphasizes capital returns.
It is important to understand the main rule right away: you are not allowed to live in this apartment yourself for at least 20 years from the date of purchase. If you move in earlier, you will lose all tax benefits and be obligated to return the VAT refunds already received. There is no separate “Vorsorgewohnung Act”: this model operates at the intersection of existing tax law provisions, particularly the Umsatzsteuergesetz and Einkommensteuergesetz. Therefore, an experienced Steuerberater (tax advisor) is essential for the correct structuring of the investment.
How a Vorsorgewohnung works: the investment lifecycle
As the diagram shows, investing in a Vorsorgewohnung is a project with a horizon of at least 20–25 years. In the initial phase, you receive the VAT refund and deduct costs; in the medium term, rental payments gradually cover loan obligations; and only after full repayment of the loan does the apartment begin generating net income. Under the updated rules of Wohnungspaket 2024, your rental activity must show a cumulative profit (Totalüberschuss) within 25 years from the start of renting (maximum 28 from the start of construction) — otherwise the tax authority will classify the activity as a “hobby” (Liebhaberei) and demand the return of all previously received benefits. Previously this period was 20 years, but the Wohnungspaket 2024 extended it, giving investors more flexibility.
Tax advantages: why Vorsorgewohnung is so popular
The greatest advantage of a Vorsorgewohnung is the Vorsteuerabzug — a refund of 20% VAT from the purchase price. The mechanism is simple: since you buy the apartment as an entrepreneur for business purposes, the VAT included in the new build price becomes your “input” tax, which is refunded through the tax return. For an apartment worth €300,000 gross, this means a refund of approximately €50,000, and effectively you purchase at the net price of €250,000. However, this mechanism only works for new builds where VAT is itemized in the price — when purchasing on the secondary market (e.g., Altbau in Vienna), no VAT is charged, and a refund is not possible.
The second important benefit is the annual building depreciation (AfA — Absetzung für Abnutzung) at 1.5% of the building value (excluding land). If the building is worth €200,000, you can reduce your taxable income by €3,000 annually. Additionally, Werbungskosten are deductible — all rental-related expenses: interest on the mortgage, Betriebskosten, renovation costs, property management fees, property insurance, and the tax advisor’s fee. In the first years of renting, these costs often exceed income, creating tax losses that can be offset against other income (e.g., salary) for a tax refund.
Finally, don’t forget about inflation protection: rental rates in Austria are linked to the Consumer Price Index (Verbraucherpreisindex), meaning they rise with inflation. And real estate as a tangible asset (Sachwert) preserves value even during periods of financial instability — as evidenced by the Austrian real estate market trends that we regularly analyse.
Comparison: Regular apartment vs. Vorsorgewohnung
| Criterion | Regular Apartment | Vorsorgewohnung |
| Purchase purpose | For personal use | Exclusively for renting out |
| 20% VAT refund | No | Yes (new builds only) |
| AfA (depreciation) | No | 1.5% of building per year |
| Deduction of rental expenses | No | Yes (loan, renovation, management) |
| Personal use | Immediately | Prohibited for min. 20 years |
| Minimum horizon | No restrictions | 20–25 years |
| Liebhaberei risk | Not applicable | Yes — if no profit within 25 yrs |
| Yield (gross) | — | 3–3.5% in Vienna |
Risks of a Vorsorgewohnung: what you should know in advance
Despite the attractiveness of the tax benefits, a Vorsorgewohnung is not a risk-free investment. The Arbeiterkammer (Austrian Chamber of Labour) warns in its study: over a 20+ year horizon, much can change — from personal circumstances (divorce, job loss, relocation) to macroeconomic conditions (rising interest rates, legislative changes). The most serious risk remains Liebhaberei — the classification of your rental activity as a “hobby” by the tax office (Finanzamt). If within 25 years (max. 28 from construction start) your rental shows no cumulative profit, all previously received tax benefits must be returned — including the VAT from the purchase. According to TPA Steuerberatung, this is precisely why a Prognoserechnung is mandatory — a forecast calculation demonstrating the realism of your investment plan to the tax authority.
Another significant risk is early termination of renting. If you decide to sell or move into the apartment before 20 years, you must return a portion of the VAT proportional to the remaining term. Additionally, Immobilienertragsteuer (ImmoESt) may apply — 30% of the profit on sale. We covered these nuances in detail in our article on taxes when buying and selling property.
An equally important practical risk is Mietausfall (vacancy between tenants). Each month without a tenant means not only lost income but also the need to pay the loan from your own pocket. Moreover, some developers promise unrealistic yields of 4–5%, while according to Infina the real net yield in Vienna is 3–3.5% at best. Therefore, always check whether the calculation is based on gross yield (before costs) or net yield (after all costs including Betriebskosten, management, and potential vacancies).
How to minimise risks: practical recommendations
The first and most important step is to commission an independent Prognoserechnung from a Steuerberater rather than relying on the developer’s calculations. The forecast should account for realistic rental rates (verify via current data on rent formation in Austria), at least one month of vacancy per year, rising operating costs, possible renovations, and a realistic loan rate accounting for possible increases.
Apartment selection is also critical. Optimal size: 40–55 m², two rooms, balcony or loggia, modern energy class (Energieausweis A or B). Small apartments rent out faster with less vacancy. For location selection, we recommend our reviews of the 2nd district Leopoldstadt, 3rd district Landstraße, 10th district Favoriten, and 22nd district Donaustadt. For specific new build projects, see our reviews of new builds in Donaustadt, new builds in Floridsdorf, and new builds in Hietzing.
Regarding financing — optimally invest at least 25–30% of your own funds, not exceeding 75% loan-to-value. A fixed rate for 15–20 years ensures predictable payments regardless of market fluctuations. For details on lending conditions and changes after the KIM-VO repeal, see our article real estate loan after July 1, 2025. If you are taking a mortgage for the first time, our article on credit brokers in Austria will also be useful.
From idea to keys: how to buy a Vorsorgewohnung
The purchase process begins with clearly defining your budget and goal. How much of your own funds are you prepared to invest? What is your goal — additional retirement income or capital preservation against inflation? The ideal minimum down payment is 25–30% of the net price. Next — finding the property: look for new builds with VAT itemized in the price (a mandatory condition for Vorsteuerabzug) and verify the developer through the BTVG — the law protecting buyers from developers. Pay attention to the availability of a service package (Mietenpool or rental management).
The next mandatory step is the Prognoserechnung. Without it, the Finanzamt may immediately classify the activity as Liebhaberei and refuse the VAT refund. The Prognoserechnung must be prepared by a Steuerberater — not a broker or developer. In parallel, apply for the loan: compare offers from several banks, pay attention to early repayment options without penalty (Vorfälligkeitsentschädigung). Loan interest is Werbungskosten that reduces your taxable income, but the loan principal (Tilgung) is not deductible — only the interest.
After selecting the property and obtaining the loan, the notary (Notar) prepares the purchase contract (Kaufvertrag), performs the self-calculation of Grunderwerbsteuer (3.5% of the price), and submits documents for registration in the Grundbuch (Land Register) with payment of the Eintragungsgebühr (1.1%). After registration is complete and renting begins, submit the VAT return (U30) for the Vorsteuer refund. From this point, you are obligated to charge 10% Umsatzsteuer on the rent and file an annual tax return.
Conclusion
The Vorsorgewohnung is a powerful instrument for long-term investment and pension planning that combines a real asset with significant tax advantages. VAT refund, depreciation, cost deductions, and inflation protection have an excellent cumulative effect — provided planning is done correctly. The key word here is “correctly.” Without an independent Prognoserechnung, without realistic yield expectations, and without understanding the Liebhaberei rules, this investment can become a financial burden. Choose the apartment based on rentability criteria (not personal taste), control your debt burden, and work with an experienced Steuerberater — and the Vorsorgewohnung will become one of the most reliable elements of your financial portfolio.
This article is for informational purposes only and does not replace individual tax advice. The VigoImmobilien team will help you find an investment property in Vienna and accompany you at every step. Contact us: +43 664 99 8775 99 or [email protected].
