Our Clients - sellers of real estate in Bulgaria often ask us if there is a need to pay tax when selling a property?
Due to the fact that this taxation for the sale of real estate is a rather large amount of information, we will only state the main provisions.
So, in Bulgaria, income received from the sale of housing is not taxed if:
1). The selling price is the same as it was when buying or lower, that is, there is no profit as such;
2). During one calendar (tax) year, one property is sold. Housing must be owned for at least three years;
3). During one calendar (tax) year, two real estate objects are sold, but they have been owned for at least five years.
4). Property for sale, which was obtained by inheritance or by will.
Note that the tax year in Bulgaria is equal to the calendar year, that is, from January 1 to December 31.
When selling real estate, tax is charged not on the entire value of the object, but only on the profit received. This means that if, for example, you sell a property for a higher price than you bought it, then the tax will be charged on the difference between the purchase price and the sale price. 10% is deducted from the amount of profit - for expenses, and the remaining amount is taxed at a rate of 10%.
For example: You bought an apartment for 30 000 euros. Then you sold it for 35 000 euros. Profit amounted to 5,000 euros. Accordingly, we subtract 10% from income - for expenses, that is, 500 euros. The amount of EUR 4,500 is subject to a 10% tax.
In Bulgaria, income tax is 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. For example, if you sold an apartment in 2020, then you will need to file a tax return and pay tax by the end of April 2021. The declaration can be submitted in person or via the Internet on the NAP website.
So, these are the basic rules regarding taxation when selling a home in Bulgaria. If you have any additional questions, we will be happy to assist you!