Taxes and fees when buying real estate in Bulgaria

Налоги и сборы при покупке недвижимости в Болгарии

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.

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It involves annual taxes and fees. In Bulgaria there are two of them.

There is a residential house tax that every owner in Bulgaria must pay annually. It is a percentage of the property tax assessment and is different for each''municipality.

Another important expense that should not be underestimated is the garbage collection fee.

The authorities use what is known as the tax base to calculate the residential building tax and garbage collection fee. Each property has a property tax assessment (tax base) determined by location, square footage, floor, year built, and many other criteria.

How do you get a property tax assessment for your property? It is important to know that real estate transactions require the seller to submit a property tax assessment. Only the property owner can request and receive such an assessment from the authorities.

The property tax assessment is used to determine the tax on a residential home,''The authorities are mulling over a way to rectify this. Currently, owners pay between 0.1 and 5ppm each year. In most municipalities, the garbage collection fee is between 1 and 3.5ppm.

We can use the previous example - for an apartment costing 50,000 euros in Sofia you will have to pay 80 euros garbage collection fee.

Before buying a property in Bulgaria, it is always a good idea to have at least a rough idea of what the additional costs will be.

The local tax that is paid on the purchase is a significant part of these costs, but there are also other costs - lawyer and notary fees, real estate agent fees, etc.

All of these fees and taxes associated with the purchase can''amount to between 8 and 10% of the value of the property.

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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