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Real estate in the private foundation

Real estate held by the foundation: governance of administration and realisation, use by beneficiaries and typical areas of conflict between bodies and family.

Real estate is often the largest and most emotional part of the assets of an Austrian private foundation. Holding, using and later realising real estate through the foundation raises its own legal and tax questions.

We advise foundations on the acquisition, management and sale of real estate, including the frequent conflicts between the board, the founder family and beneficiaries who use foundation real estate.

Acquisition and endowment of real estate

The endowment of real estate to the foundation is a taxable event. In addition to the foundation entry tax, land transfer tax, land register fees and, depending on the case, real estate income tax apply. A careful advance calculation with the tax adviser is essential.

Real estate in the foundation must be valued cleanly. The valuation forms the basis for later distributions, sales and disputes with the tax office. Unrealistic valuations turn back on the foundation years later.

Management and use by beneficiaries

Where beneficiaries use foundation real estate free of charge or at reduced rent, this is a distribution that must be treated tax-wise. Loose handling of this point is one of the most frequent audit risks.

Larger management measures (major maintenance, conversions, sales) belong in formal board resolutions with expert documentation. Real estate transactions between the foundation and the founder’s environment must always be at arm’s length.

  • Endowment of real estate triggers taxes and register fees
  • Realistic valuation as the basis for later steps
  • Use by beneficiaries as taxable distribution
  • Real estate transactions between foundation and founder’s environment strictly at arm’s length

Realisation and disputes

The sale of foundation real estate must always be tested against the purpose of the foundation. A sale purely to satisfy beneficiaries can be problematic. Anyone who wants to sell should document the reason clearly.

Disputes typically arise where beneficiaries want to continue using real estate that no longer fits the purpose of the foundation, or where the value of a property becomes significant in an inheritance. We assess the constellations along the PSG and the tax framework.

This overview reflects the Austrian legal position under the Private Foundation Act (PSG) and does not replace advice in the individual case. The specific circumstances of your foundation are always decisive.

Frequently asked questions

What clients often ask.

Can a beneficiary live in foundation real estate? +
Yes, but only under transparent rules and taking taxes into account. Free or reduced-rent use is a distribution and must be treated accordingly. A tenancy at arm’s length is often the cleaner solution.
How is a sale of foundation real estate handled? +
The sale must be tested against the foundation purpose and requires a proper board resolution. Real estate income tax and, depending on the case, foundation-specific rules apply on the tax side.
What happens to real estate on dissolution of the foundation? +
On dissolution real estate is either realised in liquidation or transferred to the ultimate beneficiary in kind. Both routes have significant tax consequences and should be planned in advance.
Can the foundation acquire real estate abroad? +
Yes, but the tax treatment becomes more complex. Foreign law applies to the real estate itself, Austrian law to the foundation. Coordination with foreign advisers is essential.
Related topics

This may also be relevant to you.

Formation and foundation deed

Setting up with a clear architecture: foundation deed, supplementary deed, governing bodies and asset endowment drafted so the foundation delivers what the founder intended.

Founder rights, amendment and revocation

Reserved founder rights secure influence: amending the foundation declaration, revoking the foundation and the limits where several founders are involved or rights have lapsed.

Beneficiaries and information rights

Beneficiaries have rights: information about the foundation, inspection of the foundation declaration and remedies when the board blocks or distributions stop.

Conflict in the foundation, a blocked board, information denied?

In foundation law, structure, deadlines and evidence decide. Call us directly or write to us, callback within one business day.

+43 662 6280000 kanzlei@brandauer-rechtsanwaelte.at Book an initial consultation (72 euros)

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BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg