buying (foreclosed) property question

[Tadaa]

i have a question about buying property.. couldnt really find this info posted before

but let me explain the situation first.

6/7 years ago my boyfriend bought a small house for 20.000? in a small village in the middel of finland (virrat area)
it needs about 10.000 euros to fix i up really nicely but just a few thousand to make it a livible vacationhouse
(its an old wooden house, 80 years old, without running water, but a well in the yard. the house has two massive rooms downstairs and two smaller ones upstairs.two sheds in the yard (one with a sauna but thats a bit run down at the moment but usable.. yadi yadi

back then he was working a lot and making nice money but his ex convinced him to get a 2nd loan of 8.000(student loan i think)
when they broke up he kind of @#$% things up financially and didnt pay his bills up untill the goverment started taking it out of his paychecks from work. he still owns almost 15.000 now of which 8.000? on the house..

the house is on foreclosure now. they had an online auction a few months ago. somebody offered 5000 euros for the place but he offered anonymously 15.000 right after so they had to go higher then him and he would brake even on his loans.
but no response after that
and in the beginning of april they will do a live auction..

i have always dreamed about getting an old place like this one and fix it all up myself so i offered him to put in some money myself so we could either sell it for a better price and make some money and get experience. (he didnt say it was foreclosed back then) or just keep it and make it into a little paradise vacation place (and sell it one day for a sweet price



soo.... here is the question

is it legal that he 'sells' the house to me for lets say 1.000 euros and we sign an agreement that if i sell it he gets his money back. so basicly just do a name switch on the paperwork so we still have it
(he still has to pay his loans then.. and i have the property so they cant take it away (do meaning i have to pay property taxes and stuff and i dont know anything about this either but i guess thats part of 'adult'life to figure this out

somebody said to me today its not possible for tax reasons (you cant sell a house way under the actual value (money laundring prevention)
the house has a tax value of 30.000 on the paperwork

any ideas on this?


( i know the best option would be to try and sell it as high as possible, make sure he doesnt have debt anymore and go live in a sunny country
on the other hand.. some people get loans for 200.000 for their houses so..

[Tadaa]

some things i found on expat-finland.com

if for example it is legal to buy this propery off him for 1000 euros and i sell it one day for 40000

"Transfer Tax - Leimavero
Transfer tax is imposed on transfers of real property (ex. a house with land) and securities (ex. shares in a housing company when buying an aprtment). Tax on transfers of real property is 4% of the transfer price, and 1.6% in the case of securities.
Transfer tax is usually imposed on the purchaser. "

Transfer tax -- 4 percent of the purchase price or value of other remuneration -- is payable on the
transfer of real property (on one of the pdfs on that website

meaning i would have to pay 4 % taxes on the 1.000 euro ?
or do you pay 4% purchase taxes on the taxation value of the house (that was 30.000 when he got it)


"Capital Gains on Property - Tax Exemption
In 2013 the capital income tax rate is 30% for income up to €50,000 and 32% for capital income exceeding that amount. However, the gain from the sale of a taxpayer’s home (i.e. the 'profit'; the difference between the purchase and sale price) is exempt from capital gains tax if the taxpayer has owned and lived in the home for a continuous period of at least two years."
meaning i just put my residence there for two years and dont pay any taxes on the profit?

[priki]

Is this like 'pakkohuutokauppa'? If yes, the bank (or more likely the ulosottomies) can deny the sales with too low price. I'm assuming the house has 'kiinnitys' that the bank is holding for the loan, and they need their money. So most likely they have minimum value for the sales. At least they had twenty years ago, when I was mixed up into one pakkohuutokauppa. The neighbor had planned to buy the property cheep, and left the building when he heard the minimum sales price...
In addition, if the house is sold clearly under its real value, the value between the sales amount and the real property value is considered a gift, and you need to pay gift tax.
If the property value is 30k€ and you buy it with 1k€, the gift would be 29k€, and gift tax would be about 5800€. Plus the 4% transfer tax and so on.

[Rip]

In addition, if the house is sold clearly under its real value, the value between the sales amount and the real property value is considered a gift, and you need to pay gift tax.

I do not know the relevant legal things, but my common sense would say that this can not apply if it sold in an auction by the bank. If hers is the best offer, and it is accepted by the bank, then that IS the real value of the place.

[Tadaa]

thanks for the reply

Kiinitys? damn.. i googled that word and found this.. haha
https://www.finlandforum.org/viewtopic.p ... 0&start=15

he said the bank (or the collecting agency) wont release a minimum price they want for it. maybe they will on the auction day tho..
i cant pay the place with cash and i dont want to get a loan for it cause then i am the one with a loan instead of him..

and i guess 'giving' the place to me isnt an option either cause i would too much in gift taxes.. and then i could end up putting more money in it then getting out of it one day.( not doing this for the money tho, but losing on it is never a good idea

[Tadaa]

In addition, if the house is sold clearly under its real value, the value between the sales amount and the real property value is considered a gift, and you need to pay gift tax.

I do not know the relevant legal things, but my common sense would say that this can not apply if it sold in an auction by the bank. If hers is the best offer, and it is accepted by the bank, then that IS the real value of the place.

but the bank can deny the best offer keep the property and sell it later on in time i guess?

the idea so far is to go bid on it anyway and raise the prise if there is somebody with a serious offer

[Tadaa]

well.. and i also asume he cant sell it anyway as its on foreclose unless the bank approves (and they will never do for 1000 euros)

[priki]

In addition, if the house is sold clearly under its real value, the value between the sales amount and the real property value is considered a gift, and you need to pay gift tax.

I do not know the relevant legal things, but my common sense would say that this can not apply if it sold in an auction by the bank. If hers is the best offer, and it is accepted by the bank, then that IS the real value of the place.

Yes, sure, I understood this that they want to make the deal outside of the auction.
If the price 1000€ is the winning price in the auction, then there should not be any problems. I'm just assuming that this kind of price is not enough.

[Rip]

well.. and i also asume he cant sell it anyway as its on foreclose unless the bank approves (and they will never do for 1000 euros)

Well, you could not have bought it from him with outstanding loans (kiinnitys) he can't pay so that the bank can't still put it for auction to cover the same loan, unless you have the bank approval - even before foreclosure.

If it goes to auction, the notification will tell if you need to pay it in cash or are you given a short period to pay the rest after making a smaller cash payment at the spot.

[betelgeuse]

In addition, if the house is sold clearly under its real value, the value between the sales amount and the real property value is considered a gift, and you need to pay gift tax.
If the property value is 30k€ and you buy it with 1k€, the gift would be 29k€, and gift tax would be about 5800€. Plus the 4% transfer tax and so on.

http://www.vero.fi/fi-FI/Henkiloasiakkaat/Lahja

You can undervalue 25% before it's considered a gift.

[Rip]

Anyway, if you'd buy the place without bank releasing "kiinnitys" they could still have it forcibly sold again to get their money. If there is 8000 € loan attached to it, they will not accept less than that unless they think the true value of the place isn't any better than the offer.