Taxes and fees when buying real estate in Bulgaria

International Law Office D. Vladimirov & Partners March 07, 2018 The International Law Office of D. Vladimirov & Partners To print this article, you need only register or log in to Mondaq.com.

This article is part of a series of 8 articles on buying real estate in Bulgaria. The other articles in the series cover the following topics:

• Buying real estate has its price. Buyers should always consider not only the price they pay for the property, but also all the fees and taxes associated with such an investment project.
• Buying real estate in Bulgaria is no different, so foreigners who decide to enter the local real estate market should have a clear idea of what''expect and what the costs may be.
• One of the most significant taxes associated with the purchase of real estate in Bulgaria is the so-called local tax. Its full name is Tax on the acquisition of real estate as a result of a gift or for remuneration.
• In accordance with the Bulgarian Local Taxes and Duties Act, this local tax must be paid first, and only after that the transaction can be registered in the Register of Deeds by a judge and become active.
• The amount of this tax is currently 2.5% of the confirmed pecuniary interest. The confirmed pecuniary interest is the price in the contract between the seller and the buyer.
• In the past, many sellers declared a lower confirmed''pecuniary interest to reduce the amount of local tax, but this creates uncertainty and is no longer as common.
• The question now arises as to who is responsible for paying the local tax. Under section 45 of the Local Taxes and Charges Act, local tax must be paid by the purchaser of the property unless otherwise agreed.
• If there is an agreement to split the tax between two parties, they are jointly liable. It is also possible to agree that the tax will be paid by the seller.
• This reminds us that negotiation during the purchase is very important. The buyer and seller must come to an agreement on who will pay the local tax because it is a significant amount of money.
• Practice'. 'shows what is usually paid by the buyer, but there are many exceptions to this rule and you, as the buyer, can use this when negotiating the rest of the terms of the deal.
• It is important to know that local tax is not always paid by the buyer of the property.
• Another important issue when it comes to money is when it is due. Local tax is paid at the notary when the deal is signed.
• Many people know that owning real estate is an expensive privilege.

The content of this article is intended as a general guide to this topic. Experts should be able to advise on your particular circumstances.

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