Very often, our Clients are interested in the types and amounts of taxes that are levied on the purchase, operation and sale of real estate in Bulgaria.
In this article, we will tell you about the main taxes associated with real estate.
Tax when buying property in Bulgaria
When purchasing real estate in Bulgaria, the buyer should be aware that the main burden of re-registration of ownership falls on him. At the same time, the taxes levied by the state upon purchase are the same for both Bulgarian citizens and foreign citizens. On the day of the transaction, the buyer pays a purchase tax in the amount of 3-5% of the material interest. This means that this percentage is calculated from the amount of the transaction. If the tax (state) assessment of the property is higher than the sale price, the tax will be calculated based on the tax assessment. The burden of paying for notary services is paid by the Buyer. It must be borne in mind that there is a mandatory fee for entering data on new owners in the State Register of Real Estate. The fee is 0.1% of the value of the purchased property.
For its part, the seller bears the burden of preparing the following mandatory documents for the transaction: a tax assessment and a certificate from the cadastral service (diagram of an apartment, house or plot).
Tax on the sale of real estate in Bulgaria
In Bulgaria, real estate that has been owned for more than 3 years is not taxed. Without paying tax, you can sell two apartments in Bulgaria in one calendar year. Subsequent transactions within one year will be subject to income tax.
If the property is owned for less than 3 years, then when the sale of housing is paid 10% income tax The tax is calculated from the difference between the purchase price and the sale price.
In Bulgaria, income tax must be paid at the office of the Territorial Directorate of the National Revenue Agency (TD NAP) at the location of the property. The tax return for payment of income tax on the sale of real estate is submitted by April 30 of the year following the year of sale.
If the property is donated by first-line relatives, then the donation tax is 1%. In all other cases, the tax rate is 4%.
Property ownership tax
All property owners, regardless of which country they are citizens of, pay property tax (“dank imot”). To date, property ownership tax in Bulgaria is the lowest in the European Union.
The amount of real estate tax is determined annually by each municipality separately. Tax rates range from 0.15 to 0.25% of the tax (state) assessment of the property, which in most cases is much lower than the market value of housing. The tax service charges tax from the moment the real estate is officially put into operation. The tax is due annually whether you operate it or not.
In addition to the property ownership tax, homeowners pay the so-called garbage tax (“dank estimates”). It is paid once a year along with the property tax. The amount of this garbage collection tax is also calculated on the basis of the tax assessment of the property and ranges from 0.14 to 0.45% of the corresponding assessment.
Tax on the rental of real estate
If you decide to rent your property in Bulgaria for a long-term lease, then a lease agreement must be concluded. A copy of the agreement is submitted to the Tax Service by April 30 of each year. The tax is 10% of the rental price for the previous year.
If you plan to rent your apartment on your own, for example, for daily rent to tourists, then the legislation obliges the owner of the housing to go through the procedure for categorizing housing. The municipality will then determine the amount of the tax.
In most cases, the rental of real estate is carried out with the help of management companies. The cost of their services, on average, is about 30% of the income received.