Guide to Property Taxes in Romania
Tax Rate on Rental Income |
|||
| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 10% | 10% | 10% |
Nonresidents are taxed on their income from Romanian sources. Married couples are assessed and taxed separately; joint taxation is not permitted. No allowances are available for nonresident taxpayers.
Nonresidents are not allowed to directly own Romanian immovable properties (incorporation is needed).
Income Tax
Income from all sources is aggregated and taxed at a flat rate of 10%.
Rental Income Tax
Rental income earned by nonresidents is taxed at a flat rate of 10%. A fixed deduction of 40% of the gross income is allowed to account for income-generating expenses. Taxpayers may also opt for itemized deductions of all expenses.
A landlord in Romania has the legal obligation to pay the taxes levied on income from property, except in the case of a foreign landlord, where the tax is withheld and paid to the state by the person paying the revenue, meaning the tenant.
Corporate Taxation
Nonresidents can establish a local corporation in Romania to purchase real property.
Income and capital gains earned by corporations are taxed at a flat rate of 16%. Expenses incurred that are directly related to obtaining income can be deducted from the gross income (i.e maintenance, cleaning and other operating costs).
Capital Gains Tax
No tax is levied on capital gains realized by individuals from selling real property; however, a transfer tax is levied on the transfer of immovable property in Romania. Income from the transfer of real estate is taxed based on the transaction value, with rates depending on how long the property was owned. For constructions of any kind and their related lands, as well as lands without constructions, a tax rate of 3% applies if the property was held for up to three years. If the property was held for more than three years, the tax rate is reduced to 1%.
Buying and Selling Costs/Taxes
| Transaction Costs | ||
| Who Pays? | ||
| Notary Fees | 0.44% - 2.20% | buyer |
| Legal Fees | 1.00% | buyer |
| Real Estate Agent Fee | 4.00% - 6.00% | seller |
| Costs Paid by Buyer | 1.44% - 3.20% | |
| Costs Paid by Seller | 4.00% - 6.00% | |
| Roundtrip Transaction Costs: | 5.44% - 9.20% | |
| Source: Global Property Guide, PWC, Deloitte | ||
Property Taxation
Property Tax
Property tax is levied on buildings, with the applicable rate varying depending on the building’s classification and property value. Property tax on residential buildings ranges from 0.08% to 0.20%, while property tax on nonresidential buildings ranges from 0.50% to 1.30%.
Land Tax
A local tax is levied on land located in urban areas in Romania, payable by the owner. The tax rate varies depending on the location of the property.
