BUYING FACTS

Buying and ownership of an apartment is straightforward and purchase costs including legal fees should be in the region of 5% of the purchase price

 

When buying a house or land the process is a little different. Non Bulgarian nationals are not allowed directly to own land and therefore this type of purchase is made via a registered company which has to be established in Bulgaria. This company is 100% owned by the buyer and therefore you have indirect ownership via this entity.

This is a well established practice and your lawyer can arrange this for you for approx €1000.

The Purchase Process

The purchase process is as follows:

· A reservation deposit is paid to hold the property.

· If the property is a new house, re-sale home or land then a Bulgarian company must be formed to own the

      land.

· An initial private purchase contract is then signed and an initial payment is due (usually 10% - 30%

      depending upon whether a re-sale or off plan).

· The Notary Act is then signed in front of a Bulgarian Notary, either in Bulgaria or in the Bulgarian 

       Embassy. In the case of an off-plan development the Notary Act is signed once the building is complete.

· If you have purchased off plan a staged payment process is agreed

· If the property you are purchasing is finished then the full purchase amount is payable on completion of

      sale.

The time each stage takes place depends upon the type of sale. In the case of an off plan development, private contract is usually signed within weeks of reservation.

 

Basis of Taxation

 This is as follows:-

Rental Income

The basis of taxable income is the gross income received less tax deductible property related expenses and depreciation. These related expenses are such as repairs, maintenance, renovation and interest on any loan used to purchase the property. A municipal tax of 10% is then levied on the profits, which is then deductible before calculating taxable profits which are subject to a corporate tax rate of 19.5%

Capital Gains

Capital gains are treated as income and are subject to corporate income tax. There is a tax treaty agreement with the UK which means that you do not pay the full capital gains tax in both countries.

Transfer Taxes

Apart from corporate tax, no other direct taxes are levied on the transfer of real property. The transfer is however, subject to Notary and Municipal fees. The notary fees are paid on the higher of the market price or book value of the property at varying rates and to a maximum of BGN 3,500 leva.

In addition 2%  of the market value is paid to the municipality in which the property is located

Local Taxes and Rates

The owner of a building or plot is obliged to pay a real estate property tax. When a building is built on a State or Municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. Arable land is exempt from local taxes.

In addition to real property tax, owners also pay waste collection fees.

Value Added Tax (VAT)

All real estate transactions are subject to VAT at the uniform rate of 20%.

The buyer is entitled to a VAT refund if they are registered for VAT purposes.

 

 

 

 

 

To ensure you receive the correct legal advice you must speak to a lawyer.

Contact us on 01753 858833 or email : info@bulgariatoday.co.uk

Bulgarian Property Sales, Off Plan Properties and Homes in Bulgaria