How high are realtors’ and lawyers’ fees in the Bulgaria? What about other property purchase costs?
|Transfer Tax||0.10% - 3%||buyer|
|Notary Fees||0.10% - 1.50%||buyer|
|Real Estate Agent´s Fee||2.50% - 3%
2.50% - 3%
|Costs paid by buyer||2.80% - 7.60%|
|Costs paid by seller||2.50% - 3%|
|ROUNDTRIP TRANSACTION COSTS||5.30% - 10.60%|
| See Footnotes
Source: Global Property Guide
Buyers should remember that unlike the UK, US, and other developed countries, Bulgaria has no centralized property registry. Property searches will be necessary, and the process needs to be entrusted to a competent Bulgarian lawyer or consultant.
It is very important to find an advisor that you can trust, and have a full discussion about why you are buying (for investment? for residence?). Do NOT be persuaded by developers or by investment schemes that it is unnecessary to have a careful discussion with a truly trusted advisor. It is absolutely necessary.
“Bulgaria gives buyers a very good tax rate on income tax BUT you need support, you need a trusted advisor,’ says Bogdan Ivanchev of Bulgarian Accountant. ‘And this is the biggest problem in Bulgaria – they will cheat you.
‘It is always important [for the advisor] to understand what the client wants the property for. Knowing that, we can devise a consistent strategy, from A to Z.”
Foreign investors may purchase property and the land it had been constructed in. Foreign investors are restricted from owning agricultural land but the restriction will fall off in 01 January 2014.
Citizens of EU states may own property and land in Bulgaria at the same terms and conditions as Bulgarians.
At present, there is an alternative option when buying landed property – to form a Bulgarian registered company, with the buyer as sole owner and director (the buyer could choose to add other directors, e.g., his spouse).
When buying non-landed property, a company is not necessary, but is often advisable. Otherwise if you buy an apartment and the head lease is sold, the new owner could forbid entry to the land around the apartment.
An important issue is: ‘Should the company be VAT-registered or not’? Discuss this with your advisor.
So if you are buying from a developer (who is likely to be a company registered for VAT), you may need to become VAT-registered.
In any case, if the sale price is more than BGN50,000 (€25,510) and the property was bought through a company, your company will need to get VAT registered, because its turnover is more than BGN50,000 (€25,510). After the sale, you need to register for VAT within 14 days.
If VAT is payable, VAT is 20% of the ‘taxable base’ - the difference between the sale price and the ‘base turnover’ of BGN50,000 (€25,510) – so if you sell for BGN51,000 (€26,020), VAT is payable at 20% of BGN1,000 (€510). Or alternatively if your purchase price was above BGN50,000 (€25,510), VAT is 20% of the difference between your purchase and your sale price.
A complication arises if you bought from a company, because you would then probably have reclaimed the VAT your developer paid (and included in the sale price). You would have registered a company, then registered for VAT, and reclaimed the VAT that your vendor charged you. When you sell, you will need to pay back that VAT refund in full (even if the price of the property has dropped).
To set up a company to acquire property is not unusual, and there are many realtors who offer this as part of the package.
The steps are as follows:
To register a Private Limited Company (OOD) you must:
You now have a legal company.
Note: In Bulgaria there is a Tax Estimation Price similar to UK’s “ratable value”. This value is usually several times lower than the sale price. For various reasons most vendors prefer that this lower price should appear on title deeds rather than the real sale price. Because of this, there might be discrepancies between the price you are paying and the price written on title deeds.
Under Bulgarian law the transfer of property rights, as well as the establishment of limited rights in rem in respect of real estate is done by way of a formal agreement (generally referred to as a “Notary Deed”), executed by the parties and a duly qualified Notary Public authorized to act within the region of location of the property.
Transfers of ownership or limited rights in respect of real property are subject to registration with the relevant Real Estate Registry. The legal owner of the property is considered to be the person registered in the Real Estate Registry.
It takes an average of 17 days to complete the procedures needed to register a property.
|TAX BASE, BGN (€)||NOTARY FEE|
|Up to 100 (€50)||BGN30 (€15)|
|100 to 1,000 (€500)||1.50% on band over €50|
|1,000 to 10,000 (€5,000)||1.30% on band over €500|
|10,000- 50,000 (€25,000)||0.80% on band over €5,000|
|50,000- 100,000 (€50,000)||0.50% on band over €25,000|
|100,000 – 500,000 (€250,000)||
0.20% on band over €50,000
|Over 500,000 (€250,000)||
0.10% on band over €250,000 but not more than BGN6,000 (€3,000)
#1 FRANCES BRENNAN | August 25, 2010
Im attempting to purchase an apartment in sunny beach, bulgaria. The agreed purchase price is 26,000 euros the fees they are charging me is 2,000 euros is this correct, i did not go through an agent I went directly to the buyer.
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