You often read about the fact that real estate is being sold. Thus, a real estate transaction is an act between at least two actors in which a property becomes part of a contract. The most common types of real estate transactions are buying/selling. The buyer usually pays the seller a certain amount of money. Real estate transactions are therefore financial transactions. Certain other types of financial events may also be considered real estate transactions for tax purposes.
Typically, in a real estate transaction, the buyer of a property transfers money to the seller in exchange for the title. However, payment can be made in different ways. One option is an instant cash payment, where the full purchase price is paid from the buyer’s bank account. But buyers can also take out a mortgage (loan), in which the acquired property usually serves as security for the debt of the payments to be made. An owner-funded transaction also comes into play every now and then, in which the seller agrees to give the buyer a loan to purchase the property. The sale of high-rise projects is often concluded as a so-called “forward deal“.
For tax reasons, real estate transactions can take various forms and it is important to declare such transactions accurately and in detail. Often, property-related companies are used in a real estate transaction that are wholly or partially owner of a property. In the case of a large real estate transaction, each side usually has its own mandate: the real estate buyer engages a team of consultants and the real estate seller also.
