Bulgaria's New Empty-Home Tax: What Owners and Investors Must Do Before 2027

Bulgaria will tax empty homes from 2027 — what that means for property buyers and investors

From 1 January 2027 Bulgaria will begin charging an annual levy on homes left unoccupied for more than six months a year. For anyone tracking the real estate Bulgaria market, this change alters the cost of holding second homes and speculative assets and forces a rethink of buy-to-leave strategies.

This article explains the new law, who it affects, how large the charge is, and the practical steps owners, agents and investors should consider. Our analysis draws strictly on the parliamentary approval and government statements and adds practical insight for people who own or plan to buy Bulgarian property.

What the law actually says

Parliament has approved a new measure targeting empty residential properties. The core points are simple and precise:

• A property that is empty for more than six months in a calendar year will be subject to an annual tax.
• The base rate is 0.5% of the cadastral value of the property.
• For foreign owners who are not tax residents of the EU, the tax rate can be increased to 1%.
• The measure takes effect on 1 January 2027.
• Exemptions include properties rented under social programmes and homes undergoing reconstruction or in the process of sale.

Parliament made this part of a wider housing policy reform aimed at addressing supply shortages and discouraging speculative holding of housing stock. The government expects the tax to encourage owners to rent out empty flats and houses, increasing supply and helping to stabilise housing prices.

Who is affected — and how much will it cost?

The new levy is designed to hit properties that sit vacant. But the legal language about vacancy — 'empty for more than six months' — leaves room for interpretation, and that creates both opportunity and risk for owners.

Who is in scope

• Domestic owners who leave a property empty for more than six months will face a charge equal to 0.5% of cadastral value.
• Foreign owners who are not tax residents of the EU may see the rate rise to up to 1% of cadastral value.
• EU tax residents who own property but pay taxes elsewhere in the bloc are treated more favourably than non-EU tax residents.

How to read the cost

Cadastral value is the official property valuation used for taxes in Bulgaria; it is often lower than market value. That means the headline percentage — 0.5% or 1% — applies to a base that may be conservative relative to what you would pay on other tax bases.

For example:

• On a property with a cadastral value of BGN 100,000, the annual tax at 0.5% is BGN 500.
• For a non-EU tax resident owner at 1%, the same property attracts BGN 1,000 a year.

Those are simple calculations, but they matter: if you own multiple empty units, the levy compounds, and the incentive to rent or sell becomes stronger.

Why the government passed the tax — and whether it will work

The explicit policy goal is to increase the supply of rental housing and reduce speculative holding that removes units from the market. From a policy standpoint the measure makes sense: charging owners for prolonged vacancy creates an ongoing carrying cost that can tip the balance toward listing a property for rent or sale.

What the government expects

• More units will be put on the rental market, easing shortages in high-demand towns and cities.
• Price pressure will ease as speculative hoarding becomes more expensive.

What could limit the impact

• The law targets vacancy, not pricing. Owners may still withhold properties if market rents or sale prices do not cover costs.
• Enforcement details will matter. How municipalities define and prove 'vacant for six months' will determine compliance and the law's real-world effect.
• Short-term rental markets (holiday lets) may complicate occupancy records; the law’s wording on temporary lets is not specified in the summary, and will need clarifying regulation.

We think the tax will change behaviour but not erase shortages. It is a blunt instrument: it nudges supply but does not directly increase housing construction or address affordability drivers such as wages and mortgage costs.

What this means for foreign buyers and investors

Foreign buyers are a key target of the higher rate. The differentiation between EU tax residents and non-EU tax residents is a clear signal that the government wants to discourage absentee ownership by non-EU entities.

Practical implications for investors

• The higher rate for non-EU tax residents increases annual holding costs — roughly double the base charge in the headline scenario (0.5% vs 1%). That reduces net yields on buy-to-let properties held empty and may lower the price some buyers are willing to pay.
• Investors who plan to buy and hold properties empty as a speculative play will now face a recurring tax that erodes returns.
• Those looking to buy-to-rent can benefit if the tax pushes other owners to list units, improving overall rental supply and reducing vacancy-driven volatility.

Operational adjustments investors should consider

• Registering tax residency within the EU where possible (seek professional tax advice first).
• Converting unused units to rental stock, even on short leases, to avoid the vacancy threshold.
• Accelerating renovation and sale processes where properties were intended to be marketed later.

I recommend every foreign investor model the new levy as a line-item in holding costs and test sensitivity of their returns to both 0.5% and 1% scenarios.

Practical steps for owners, agents and landlords

The law’s effect will be decided in the months and years after implementation, but there are immediate steps owners and market participants can take.

Checklist for current owners

• Verify your cadastral value and how it is calculated for each property.
• Track occupancy carefully — keep documented evidence of tenants, leases, short-term bookings and renovation work.
• If you are a non-EU tax resident, consult a tax adviser about residency options and the administrative process to prove your status.
• Consider listing vacant units for medium- to long-term rental; even modest rental income may offset the tax and reduce overall carrying cost.

Advice for prospective buyers

• Factor the vacancy tax into cash-flow models, especially for second homes or investments meant to be empty part of the year.
• Ask sellers about the property’s recent occupancy record and whether it is subject to local housing programme obligations or exemptions.
• If you plan to use the property intermittently, calculate how many days you can be absent each year before reaching the six-month threshold.

Guidance for agents and property managers

• Prepare clear occupancy documentation templates for landlords to prove active renting or reconstruction periods.
• Offer lease management and tenant placement services to owners at risk of falling into the vacancy bracket.
• Update marketing and investor materials to show tax-adjusted yields.

Risks and unintended consequences investors should watch

No policy is without side effects. The tax may reduce speculative holdings, but it could also produce outcomes that worry investors and buyers.

Possible risks

• Owners might convert long-term rental stock into short-term holiday lets to circumvent vacancy rules; that may compress supply for residents in tourist towns.
• Higher holding costs could discourage foreign investment in regions where buyers previously drove transaction volumes, creating local price adjustments.
• Administrative burden: unclear enforcement rules or inconsistent municipal practice could create legal uncertainty for owners.

How to mitigate risk

• Keep meticulous records of occupancy and lease agreements.
• Seek clarity from local municipal offices and tax authorities as implementing regulations are published.
• For institutional investors, build the vacancy tax into acquisition models and renegotiate financing and terms where necessary.

Broader context: housing policy and market signals

This tax is one component of broader housing reform in Bulgaria. Governments across Europe are experimenting with demand- and supply-side measures to address rising rents and limited housing availability.