Can you make money with planned Slovak tax changes?

One of the proposed changes in Slovak income tax law would eliminate an exemption from capital gains on apartment sale. Currently, if you buy an apartment in Slovakia and register the address as permanent residence for two years or own it for five years, you do not have to pay tax on the income from selling it at a profit.

Slovak Finance Minister Ivan Miklos proposed a series of tweaks in tax laws to generate extra revenue as the deficit left over by the previous cabinet of populist Robert Fico spiralled out of control.

The proposal would make people pay a capital gainst tax (at the current 19% income tax rate) on gains from selling an apartment regardless of when it was acquired and how long the owner lived there. It wouls apply to all properties acquired after January 1, 20111.

If this specific proposal passes it should mean that anyone who has been thinking about buying an apartment in this down market for speculative purposes should do so before the end of December 2010, boosting demand this year compared to the start of next.

I am not sure how you could estimate the magnitude of this effect and whether it could be significant enough to trade on given transaction costs. But nonetheless anyone considering selling an apartment in the near future should do so in December rather than January (assuming there isn't a strong upward trend in place of course that would overpower the tax change effect).

Real estate lies with short legs - Bratislava apartments for sale

There is a Slovak saying "A lie has short legs" - meaning it will not get away very far. I find it so hard to understand why lying is endemic among the real estate agents here in Bratislava. There are just so many misleading adverts for properties on sale. Over the last few years I have looked at hundreds if not thousands of real estate listings, especially apartment listings in Bratislava, I have dug around looking at the same apartments on offer from various real estate agents and here is a brief list of how they usually mislead:

1. Apartment size - it is very common to list square metres including areas that definitely do not belong. Most usually the cellar will be included, often balconies, too. It is pretty common for the agent him- or herself not to know if the metres cited include cellars. In my book saying that a 73 sq.m. apartment is 84 sq.m. because of a cellar located four floors below is a blatant lie.

2. Floor - advertising often omits to state clearly than an apartment is on the ground floor, it simply does not mention floor at all. This is just misleading.

3. Location - for apartments near and even far from the Old Town, the agents check Old Town as location to make people searching for Old Town Apartments look at their offerings.

The frustrating thing is that you will eventually find the truth out and inevitably lose faith in the agent. Why do so many of them take this short-sighted view?

My Prediction: 2008 will be the year of Kosice

I am extremely bullish on Kosice - have been for years. The Google Trends screenshot shows clearly what's going on - more and more people are looking for info on Kosice on Google.

If I had the cash to spare or goodwill to borrow I would buy a nice place in the centre of Kosice, banking on its finiteness and the Skyeurope flight from London. My guess would be about 50% appreciation over the next two years.

There are real estate investment opportunities galore right now. The market is somewhat illiquid, I believe, but that may open opportunities for a buyer ready to pay in cash.

It wasn't easy to find English-language blogs in Kosice but in the end I came across a fellow internet entrepreneur, a Peter Soltes.

Slovak real estate sites suck

Seriously, one day I am gonna get just slightly more angry with Slovak real estate sites and I am going to put in the money and effort into building a usable server. The existing sites suck because they are overrun by repeat advertising. I will put in a sensible descriptive database structure and work hard to build a usable search interface.

Meanwhile, I will look at international examples, and there are definitely interesting examples abound. From C2C portals to social real estate, possibilities are endless and a good concept may even scale.