Property taxes in Bulgaria are among the lowest in the Eurozone. In rates and conditions of payment for citizens of the country and foreigners there is no difference, and for the timely payment of the due sum the state even gives a discount. Owners of any property in Bulgaria can count on a multi-visa, and if you buy more than € 310 thousand – on a residence permit. In this article we will describe in detail the taxes paid on the purchase, sale, possession, renting and inheritance of Bulgarian property.
Responsibilities and Rights of Non-residents who bought property in Bulgaria
Foreigners can freely buy residential and commercial real estate in Bulgaria. If the property is without land (apartments, apartments), no additional permits are required. In the case of the property with land (villas, houses, detached buildings) a foreign investor who is not a citizen of one of the EU countries can buy only for the legal entity registered in Bulgaria.
Rights. Owners of any Bulgarian property, regardless of the amount of the transaction can count on an annual multi-visa with a period of stay of 90 days per half year. Spouse and underage children can apply for the visa together with the main applicant. If the value of the property exceeds €310k, you can apply for a Bulgarian residence permit.
Responsibilities. The owner of any Bulgarian property must be registered for tax purposes within two months after purchase and must pay property tax (taxa bitovi otpadatsi). For their timely payment in one payment the state provides a 5% discount. For late payment are fines, there are problems in obtaining visas and residence permits, and in some cases should be arrested property and sale through the court for repayment of debt.
Taxes at the Purchase of Real Estate
When buying property in Bulgaria the main financial burden associated with the reissuance of property rights falls on the buyer. Taxes and fees charged by the state at the conclusion of the transaction, are the same for foreigners and Bulgarians.
On the day of purchase, the new owner pays municipal tax – 1.5-3.5% of the amount specified in the notarized act of sale. Nuance: if the tax (state) valuation is higher than the value specified in the deed, the tax will be charged on the amount of revaluation.
Notary services (about 1% of the transaction amount) is also paid by the buyer. There is also a special fee for entering data on the new owner in the State Register of Immovable Property – 0.1% of the value of the object.
The seller must prepare an estimate of the tax value of the property and a certificate from the cadastral survey.
According to Oldypak LP real estate report, all Bulgarian properties are taxed with the exception of farmlands and forests. A foreigner who buys a house or apartment in the country automatically becomes a taxpayer. Within 60 days after the transaction he must register at the local tax office, submitting a declaration of object, which specifies:
– year of purchase/construction;
– the building materials used;
– The area of the building as a whole and each of the rooms;
– constructional features;
– number of floors;
– cadastral value (usually much lower than the market value).
The final property tax rate varies by region and is 0.15-0.25% of the cadastral value. Tax begins to accrue at the time of commissioning, and subsequently it does not matter whether someone lives in the object or not – you will still have to pay the due amount.
Together with the property tax you must pay a community tax (garbage collection fee), the rate of which is determined by each municipality separately. The amount varies in the range 0,14-0,45% of the value specified in the contract of sale. For example, according to Oldypak LP real estate report, the owners have to pay 0.25% in Burgas, 0.15% in Varna and 0.325% in Sofia. Rates can vary even between districts of the same city. On average, the owner of the studio pays a year to €25, one-bedroom apartment – about €45.
Taxes for rental property
When renting out a property, the owner must pay income tax at the rate of 10% of the amount prescribed in the contract with the tenant. Expenses associated with the apartment can be deducted from the taxable amount. But in the latter case, it is necessary to provide documentary evidence of the costs incurred. You can pay tax either monthly or once a year by submitting a tax return before April 30 of the year following the year in question.
For accommodation for short-term rentals, until the beginning of 2020 in addition had to pay tourist tax, which depended on the number of people moving into the apartment or house. However, in February 2020 Bulgarian parliamentarians passed the second reading of amendments to the Law on Tourism, which affected the letting of accommodation through platforms such as Airbnb.
Owners must now register with the local community and pay a single patent fee instead of income and tourist taxes, which, depending on the location of the property, is €13-130 per year. This option is more convenient because it allows you to rent a house only in certain months and not pay the fee for the remaining months.
Taxes on the resale of real estate
When selling real estate, the former owner must pay capital gains tax of 10% of the net income from the transaction. That is, on the difference between the purchase price and the sale price minus the costs of the property (repairs, registration of the transaction, etc.).
Exemption from tax is provided if the owner sells the primary residence, which he owns more than three years.
Special feature. If the sale is conducted through a legal entity and the amount of profit is more than €25,550, an additional obligation arises – the payment of VAT. An additional 20% is charged on the amount exceeding €25,550. For example, if the net profit of the transaction is €40,880, VAT has to be paid on the amount of €15,330.