Slovenia: Overview
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Slovenia’s housing market crashes
House price increases in Slovenia began to slow in 2007, and started to decrease in 2008.
In the first quarter of 2009, the price of second-hand dwelling houses declined by 7% (-8.7% in real terms) from a year earlier, according to the Statistical Office of the Republic of Slovenia (SORS) - the biggest annual price fall since the series was established in 2003. From 2004-2007, house prices increased at an average rate of 13%.
The average advertised prices of apartments in Ljubljana generally fell in Q1 2009, from a year earlier according to SLONEP, the most comprehensive real estate portal in Slovenia.
The average price of 1-room apartments registered the biggest drop, at -8.4% y-o-y.
It was followed by 4-rm apartments (-5.2%), studio units (-4.8%) and 2-rm apartments (-4.7%).On the other hand, the average price of apartments with 5 rooms rose 6.3% from a year earlier, while prices of 3-rm units was relatively unchanged (0.75%).
Transactions of used houses were 56% down in Q1 2009, at 662, compared to the same period the previous year. Ljubljana saw a sharper drop, 64% down to 141 transactions in Q1 2009, from 393 in Q1 2008.
RENTAL YIELDS
Last Updated: Jul 28, 2009
Uninspiring rental yields in Ljublijana
Gross rental yields on properties in central Ljubljana range from 4.9% to 5.3%. Properties are priced at around €2,643 to €3,133 per square metre (sq. m.)
TAXES AND COSTS
Last Updated: Jul 24, 2008
Taxes are moderate
Effective Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 15% | 15% | 15% |
| Click here to see a worked example | |||
Source:![]() |
Disclaimer | ||
Rental Income: Nonresident foreigners earning rental income are generally taxed at 25%. A standard deduction of 40% of gross income is available for all taxpayers earning rental income, for income-generating expenses.
Capital Gains: Capital gains tax is levied at a flat rate of 20%. The rate is reduced by 5 percentage points for every 5-year holding period, which effectively means that properties held for 20 years or more are exempt from capital gains taxation.
Inheritance: Inheritance of spouses and direct descendants are not taxed in Slovenia. Other heirs are liable to inheritance tax and the applicable progressive rates vary depending on the relationship between the donor and the recipient and the value of the property.
Residents: Residents are taxed on their worldwide income.
BUYING GUIDE
Last Updated: Apr 10, 2007
Buying costs are moderate in Slovenia
Roundtrip transaction costs are around 6.8% - 7.7% of the property value. The 2% Transfer Tax is paid by the seller while the real estate agent’s fee at 4% (plus 20% VAT) is typically split between buyer and seller.
Transaction costs for newly constructed or renovated residential apartment or building is substantially higher because of 8.5% VAT levied in lieu of transfer tax. New apartments intended for rental are considered commercial properties and are subject to 20% VAT.
LANDLORD AND TENANT
Last Updated: Sep 15, 2006
Rental market practice is pro-landlord
Rent: Rent and rent increases can be freely negotiated but must be based on the market rate. In theory, rents must not be 50% higher than average rents in the same local municipality. In practice, this is not followed; landlords can draw contracts and change it as they wish.
Tenant Security: If the contract is for a definite period of time, the landlord has no obligation to renew the contract. If there has been no renewal 30 days before contract expiration, the tenant has to vacate the apartment at the day of expiration.
ECONOMIC GROWTH
Last Updated: May 09, 2008
Economic downturn began
The Republic of Slovenia lies at the heart of Europe, where the Alps face the Pannonian plains and the Mediterranean meets the Karst. Slovenia has excellent infrastructure, a well-educated work force, and a strategic location between the Balkans and Western Europe.
Slovania made the transition in 2004 from World Bank borrower status, to donor-partner. Slovenia acceded to both NATO and the EU in the same year.
Slovenia’s economy is fueled by exports and foreign investments, and its high level of trade openness makes Slovenia sensitive to the current global economic crisis. In view of that, the economy has suffered from the recession in export markets, primarily from its main trading partner Germany.
The unemployment rate for the first quarter of 2009 rose to 8%, from 6.77% in Q4 2008. Average wages declined by 2% in 2008, from 4% in 2007.
The manufacturing sector accounts for most employment, and the decline in exports hit the manufacturing sector hard.
Inflation rate rose to 5.68% in 2008, but began to stabilize at the end of the quarter.
In the first quarter of 2009, Slovenia entered recession, with a contraction of 6.4% following a contraction of 4.1% in Q4 2008. The economy is expected to contract by 4% for the entire 2009.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): €2,748 For a 120 sq. m. property, usually an apartment. | Rental Yield: 4.93% For a 120 sq. m. property, usually an apartment. |
| Rent/month: €1,356 For a 120 sq. m. property. | Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
6.9%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 8.5% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice. | |
JANUARY 2007
- Overseas residential property in 2007 - Business online
DECEMBER 2006
- Investors "discover" Slovenia - Property24.news
AUGUST 2006
- European Central Bank wants job barriers dropped - IHT
- Five ways into the ’Old East’ - This is Money
MAY 2006
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