How high are realtors’ and lawyers’ fees in Montenegro? What about other property purchase costs?
|Transfer Tax||3% (+19% VAT)||buyer|
|Real Estate Agent’s Fee||3% - 6%||seller|
|Costs paid by buyer||3.59%||(for old properties)|
|19.02%||(for old properties)|
|Costs paid by seller||3% - 5%|
|ROUNDTRIP TRANSACTION COSTS||6.57% - 24.02%|
| See Footnotes
Source: Global Property Guide
The Foundations of Property Law Relations of 1996 states that the reciprocity principle is the general rule that governs property and property rights acquisition in Montenegro.
Foreign individuals and legal entities can easily acquire property if the said property is necessary to their business. Foreigners can also easily acquire houses and apartments even if they are not performing business operations. However, it is necessary to register a company if one wishes to purchase land in Montenegro. Ownership can then be transferred to an individual by a simple procedure.
There are two conditions necessary to complete the purchase of a property and confirm ownership. These conditions are: “justus titulus” (legal entitlement to the property), and “modus aquirendi” (the registration of the property with the Area Property Registry).
Once a property has been chosen, a purchase contract is drawn and signed by both parties, or by their authorized representatives. All signatures must be certified by a court in Montenegro. When legal ownership is confirmed, a department within the Local Council Offices determines the value of the property. The buyer then pays the property transfer tax of 3% of the agreed valuation. Once this tax is paid, the purchase contract is confirmed by an official stamp and can now be registered with the local Area Property Registry. The purchase is complete upon payment of the purchase price.
Roundtrip transaction costs, i.e., the total cost of buying and selling a property, are around 6%.02 to 9.75% of the property value. The buyer pays the transfer tax of about 3%. The agent’s commission ranges from 3% to 6%, usually paid by the seller.
The transaction cost on newly built property is much higher because 17% VAT is levied instead of the transfer tax.
Transfer (Purchase) tax is set at 3% of the valuation given by the Inland Revenue Office. Transfer of newly built properties is not subject to transfer tax but it is subject to Value Added Tax (VAT) at 19%.
Value Added Tax (VAT) of 19% is charged on transfer of newly constructed real estate.
|PROPERTY VALUE , €||
|Up to €5,000|
|€5,000 - €20,000|
|€20,000 - €40,000|
|€40,000 - €60,000|
|€60,000 - €80,000|
|€80,000 - €120,000|
|Source: Global Property Guide|
According to common practice, lawyers are hired to prepare the sale-purchase agreement. Although negotiable, legal fees range from €100 to €300 per transaction.
#1 PIERRE | March 29, 2010
"Ownership can then be transferred to an individual by a simple procedure."
What is the procedure, and can someone give a link to the related law?
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