Bulgaria Property Buying Process

We will help you in all stages of your property buying in Bulgaria. We compiled short useful information including the cycle scheme of Bulgaria property buying process.

Property in Bulgaria offers a good bargain keeping in mind the long term prospects.

Regardless what the budget is, real estate in Bulgaria offers much better value for money than other countries of Europe.

Property in Bulgaria is famously affordable, and although prices have risen in many areas since the region was "discovered" as a real estate hotspot location - up to 20% in recent years, but it's not too late to pick up a budget home. In the capital, property commands from 1,000-1,200 euro per sq.m. (compared to 7,200 euro per sq.m. in non-exclusive areas of London), while studio flats can be bought in the Black Sea resorts or ski complexes of Bansko for as little as 40,000 euros.

Most of our customers are looking for holiday/second homes in Bulgaria with a view to retirement, however there are an increasing number of investors buying property in Bulgaria to make a capital gain in the short or long term. This increasing interest, along with some other factors such as the tourist numbers rise, NATO membership, stable economy, ecological environment, good level of health care, lower cost of living, the forthcoming EU Accession in 2007 are gradually pushing prices higher.

Property buying process in Bulgaria is not too dissimilar from buying anywhere else, there are few differences and we hope we have covered most of the issues below:

What is the law on foreigners owning property in Bulgaria
According to Bulgarian Law, foreign individual persons can buy buildings but not land. The most common method for foreigners buying property in Bulgaria is to set up a company which then owns the land and the buildings. The law is expected to change within the next years as Bulgaria opens fully in line with its expected European Union entry (2007).
The most common form of engaging in business is via a Limited Liability Company (OOD).

Using services of english speaking local lawyer
When buying a property the buyer should instruct an English-speaker local lawyer. The usual practice is for the real estate broker to recommend one to you. It is also a good idea to contact the UK law society. In this way you can arrange with them to draw up a preliminary contract of sale. This done, you will be expected to lodge a 10% deposit. From now on it is the lawyer's task to check the property's title. If everything is in order, the balance of the purchase price, land tax, and notary fees, amounting to approx 5% of the purchase price, fall due for payment. Once paid, the property is legally yours.

Splitting it all up
On property deals in Bulgaria it is common practice for the buyer and seller to split the estate agent's fees 50/50. A typical total percentage will be approximately 6 % of the purchase price. Sometimes, however, the buyer may be expected to pay the whole fee. Therefore, be sure to clarify who pays before the money changes hands.

Summary of buying costs in Bulgaria
Please see below for a list of the costs:

1. Purchase price.
2. Land tax and Notary fee depends on value of property.
   

One point you need to know about the Land tax. If both buyer and seller agree, it's quite common for a lower declared price to be entered on the Contract of Sale. This can lessen the Capital Gains Tax liability for the seller and save the buyer quite a lot of Land Tax, especially on the more expensive properties. Note that one company can own a number of properties.

Property tax summary

Transfer taxes
Apart from corporate tax, no other direct taxes are levied in Bulgaria on the transfer of real estate. The transfer is, however, subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates Aproximetly 1.5% + VAT. In addition, 2.5% + VAT of the market value of the property is paid to the municipality in which the real property is situated upon completion.

Local taxes and rates
The owner of a building or a plot is obliged to pay a real property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. Arable land is exempt from local taxes.
The property taxes for your own property in Bulgaria are very low. For example the annual property taxes and the annual garbage taxes for a property in a big Bulgarian city or in a resort area are 50-70 EUR.

Value Added Tax
Transactions with land and lease of property for residential purposes are exempt from VAT (Value Added Tax), all other real estate transactions are subject to VAT at the uniform rate of 20%. However the buyer/lessee is entitled to a VAT refund, as soon as it is registered for VAT purposes.

Annual Costs
Annual costs for running a house or an apartment in Bulgaria are considerably lower than in UK app. 900-1200 EUR. Costs vary according to the size and location of the property and how much is it in use. This includes:

a: Estimated charges for electricity, water and telephone;
b: Maintenance fees if the property is located in a complex area;
c: House/apartment and content

To let or not to let
When renting out the property, income tax will be levied at 10% Capital Gains Tax on any profit between the purchase and sale price.

Disclaimer
We will not be liable to any customer or member of the public for any information supplied in this publication. Our publication is provided on an "as is" basis and we do not make any representations or warranties if such information subsequently proves to be inaccurate or out of date. We cannot be held liable for any consequential loss resulting from the information we provide. Any decision made in relation to purchasing goods and/or services as a result of information obtained from our publication is your sole responsibility.