We all, at some point in our lives, have to deal with the purchase, sale or rental of a home, either as investors, as landlords or tenants or simply with the purpose of finding a home in which live with our family. Therefore, it never hurts to have some basic notions about Real Estate Law and how it affects real estate ownership. Here we are going to explain everything you need to know about it, so pay attention.
What is Real Estate Law?
Real Estate Law is, fundamentally, the set of rules, norms and laws whose purpose is the objects considered by civil law. Therefore, it is intended to regulate and govern the birth, transmission, modification, acquisition and extinction of both property rights and their dismemberment, as well as the levies and taxes that it must bear.
The basis on which Real Estate Law in Australia is based is called the RE Registry Law. The purpose of its publication in the Official State Gazette and its execution was to expedite all the processes that we have mentioned above and that, up to that moment, were frankly difficult to carry out. In fact, it puts its grain of sand when it comes to decentralizing the system, allowing not a single public administration to undertake them. It also focuses on the use of new technologies and faster access to justice.
However, there are other legal texts that also have a direct influence. This is the case, for example, of the Australian Constitution, which establishes the legal framework on which the right of everyone to have a decent home is founded. Likewise, although to a lesser extent, there are other laws and decrees that are also related, as is the case of the Mortgage Law.
For its part, the state body in matters of RE Law is the Property Registry. In fact, it is in charge of making effective any change of ownership regarding the ownership of a property, as well as certifying its rental status or any other matter. Therefore, although it is not always mandatory, it is essential for most procedures of this type.
What is real estate?
We have all heard about RE. However, despite the simplicity of the concept and its definition, not everyone knows exactly what they are. Specifically, these are properties that, due to their physical characteristics, cannot move or move from the place where they are.
To be more exact, the laws establish a series of criteria based on which can be classified. In this sense, a distinction must be made between:
1. RE By incorporation. Constructions of residential buildings, single-family houses, etc.
2. RE by nature. They refer to the plots, both on the ground and in the subsoil.
3. RE by analogy. This is the case with mortgage grants.
4. RE by representation. This point refers to the documentation that proves the registration ownership of the home, as is the case with deeds.
5. RE by accession. This is the most complex point since it refers to access points of the buildings, such as doors and windows. When uninstalled, they are considered movable property, while when they are part of construction, they are real estate.
Therefore, real estate is all the real estate that we are used to. Knowing this will allow you to better understand that there is a very close relationship between them and Real Estate Law since, fundamentally, they represent the bulk of the subject on which the discipline is concerned.
Relationship between Real Estate Law and Real Estate
Real Estate Law, as we have already mentioned, regulates everything related to real estate. Beyond establishing the rules that regulate the use of these in the cases that we detail at the beginning of the article, it also establishes the taxation that these must bear. And it is that, as you well know, being the owner of a home, a commercial premises or any other type of property entails various tax obligations. These are the most important:
1. The IBI (Real Estate Tax). It is a direct tax that is established based on the tax assessment assigned to the property or its cadastral value. It is applied by the municipalities themselves and is paid once a year.
2. The Wealth Tax. It is a tax whose purpose is to oblige the taxation of individuals based on their net worth.
3. The Tax on the Increase in the Value of Urban Land. Another municipally owned tax whose purpose is to tax the increase in the value of a land that can be urbanized when it is transferred.
Its amount varies from many factors, the most important being the number of years since the last change of ownership, its cadastral value and its location.
4. IRPF (Personal Income Tax). Its objective, among many others, is to tax the ownership of all those real estate that does not produce income and that, in addition, is not used by its owner.
It could be said, based on this, that it is established based on the performance of real estate capital, reaching the amount of 2% of the cadastral value. For its part, it must also be taken into account, in this sense, that the capital gain obtained after a sale is also taxed.
In short, there is a close relationship between Real Estate Law and Real Estate since this discipline is in charge of establishing all the rules related to properties of this type. In addition, although not directly, it also establishes parameters regarding taxation. We hope we have been of help to you and that, from now on, you have everything much clearer.
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