Property in Bulgaria (part 2)
Svetlana Novak reasonably notes that there are not so many places for building a large number of real estate on the Bulgarian coast, so the demand for apartments, houses, villas and mini-hotels is great. According to her information, one-room studio apartments on the coast can be bought from EUR 60 thousand, a house from EUR 70 thousand, and a villa from EUR 90 thousand.
Buying a house, the buyer assumes the obligation to pay the necessary taxes and fees. However, they are quite small, and the pleasure of living in a house on the beach and the final return on investment will more than pay off the moral and material costs.
When buying property in Bulgaria, a tax of 3% of the “sale” value of housing is paid. The services of local realtors, lawyers and notaries account for up to 5% of the transaction value. Experts advise not to pay the lawyer for hourly work, but to agree on a total price of EUR 200-300 for the full range of services that he will have to perform in about one week.
Within two months from the date of purchase (purchase or completion of construction), owners are required to declare their property to the tax service. The declaration provides a detailed description of the property: year of construction, construction materials, structural features, area, number of storeys, purchase price, etc. The tax rate is the same for individuals and legal entities and amounts to 0.15% of the price of the apartment per year. For example, for property with a tax assessment of 40 thousand leva (about EUR 2.5 thousand), the tax is: 40,000: 100×0.15 = 60 leva (about EUR 31).
If a private person has several real estate objects, the tax on basic housing is reduced by 50%. The main recognized housing, where the owner and his family members live most of the year. The tax is paid in four equal parts until March 31, June 30, September 30 and November 30. Firms and individuals who pay tax once until March 31 receive a 5% discount on the amount of tax.
The amount of local property taxes depends on its location. So, the annual tax on a three-room apartment in the center of Sofia will be about EUR 150, while the national average is about EUR 80.
Every year until the end of January, the tax service sends a notification to each property owner about the amount of tax on real estate and the rate of the fee for household waste. The calculations contained in it allow the taxpayer to verify the accuracy of the data and the correctness of the amount.
Private home insurance (including furniture and all equipment) will amount to EUR 100-200 per year. Gasification in Bulgaria is not yet sufficiently developed, and most often electricity is used for cooking, the cost of which is about EUR 30 per month. For heating in large cities, steam heating is used (the monthly cost of heating an apartment with 2 bedrooms is approximately EUR 120). Tariffs for other utilities at the moment are as follows: daily electricity – 0.2 lev / kW, night – 0.11 lev / kW, water supply – 1.2 lev / cu. m
The salary of the gardener or caretaker will be about EUR 200 per month, and the alarm system will cost the owner about EUR 13-15.
The procedure for the sale of real estate in Bulgaria tells Svetlana Novak. A notarial deed of transfer of ownership and a certificate of ownership of immovable property shall be executed at the notary public, in the area of validity of which the object of purchase is located. After the seller and the buyer sign the document and verify their signatures, the notary submits a notarial deed to the district court. The registrar judge makes changes to the circumstances of the object in the state register of real estate. A registration mark is also made in the notarial deed itself. Before the transaction is completed, a notary is provided with a certificate (extract) from the same register that reflects the presence or absence of an object’s mortgage, the right to use third parties, a ban on sales, open court cases, etc. This certificate also confirms that the object belongs to a specific person – to the seller. An important document is the state assessment of the value of the object issued by the territorial tax service. The sale price of the object, which is indicated in the notarial deed, cannot be lower than this value. Based on the selling price, the size of the state duty for the transaction and notarial fees are determined. In total, they make up about 4% of the transaction value. For registration of real estate, the buyer-foreign individual must provide a passport, and when buying real estate legal entity needs constituent documents for the company.
For the transaction to take place, you first need to select the purchase object. To do this, Rumen Spasov advises contacting specialized agencies that will first examine the client’s requests, then independently select options for him, from which several most suitable ones will be selected together with the client, after which the buyer leaves for Bulgaria, where he can see his future home or an apartment. Moreover, as the specialist assures, serious agencies will certainly have in stock several additional options that, if necessary, Bulgarian representatives will demonstrate to the client. The whole procedure for inspecting real estate on the ground takes 1-3 days, depending on the number of objects. By the way, it turns out to inspect apartments faster than plots and private houses.
To purchase a home, you can also take a loan from a local bank, making about 30% of the advance payment and paying from 6.5% in euros to 8-12% in BGN. But here Rumen Spasov sees a small problem associated with the risk of loan default. Therefore, according to him, some large real estate companies resolve the situation by issuing a loan to a client on their own behalf. The English banks, who opened their branches in Bulgaria, provided the British with the opportunity to pay off their debts in a country convenient for them. Thus, the banks were able to control the situation with repayment of the loan and protected themselves from unnecessary troubles.
Some difficulty for those wishing to purchase a private house may be a ban on the purchase of land by foreigners. But this problem is not so great. It can be calmly solved by registering a legal entity in Bulgaria, for which you need to pay a registration fee and provide the necessary documents to any district court. Regardless of the place of registration, the company has the right to carry out its activities throughout the country. You can be the sole owner of the company, controlling all its capital and representing in all matters, or you can have partners, then the company will have the status of a limited liability company. A company is considered registered from the moment it is entered in the register of the Court. You will also need to register with the National Statistical Institute (Bulstat), the National Institute of Social Insurance and the Tax Service, after which the owner of the company receives all the documents confirming its full registration. Before the land purchase transaction, it will be necessary to sign a protocol of intent to buy certain real estate.
A private person can take land for long-term rent for a period of 4 years to infinity. And after the country’s accession to the European Union, the issue of land sales is likely to be resolved in the near future.
Accession to the EU will affect not only the land issue. All experts working in the Bulgarian real estate market unanimously argue that the current rise in property prices will turn into a real boom that will bring significant profits to the invested investor on time.