Taxes are important. This is health. After all, as you know, if you pay your taxes, you sleep peacefully, and sound sleep is the key to health. Moreover, the issue of taxes in Bulgaria arises for everyone who decides to buy real estate here. So let's look at this issue in detail so that you understand what additional costs you will have to face when buying an apartment here.
Tax on purchasing real estate in Bulgaria
When purchasing real estate in Bulgaria, the main financial burden for re-registration of ownership falls on the buyer. 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, which is 3-5% of the transaction amount. If the state assessment of the property is higher than the sale price, the tax will be calculated in accordance with the tax assessment. The buyer also pays for notary services and a mandatory fee for entering data about new owners into the State Register of Real Estate. The tax is 0.1% of the value of the purchased property.
The seller, in turn, is obliged to prepare the following documents for the transaction: a tax assessment and a certificate from the cadastral service (scheme of an apartment, house or plot) - these are his expenses.
Tax on the sale of real estate in Bulgaria
Real estate owned for more than 3 years is not subject to tax upon sale. You can also sell two apartments tax-free within one calendar year. When selling subsequent properties in the same year, income tax will be charged.
If the property has been owned for less than 3 years, upon sale, income tax is paid in the amount of 10% of the difference between the purchase price and the sale price. Income tax must be paid to the Territorial Directorate of the National Revenue Agency at the place of “residence” of the property. The tax return must be submitted by April 30 of the year following the year of sale.
When donating real estate to first-degree relatives, the gift tax is 1%, in other cases – 4%.
Property ownership tax
All property owners, regardless of citizenship, are required to pay real estate tax (“danq imot”). And we hasten to please you that in Bulgaria it is the lowest in the European Union. The tax amount is determined annually by each municipality and ranges from 0.15 to 0.25% of the tax (state) assessment of the property, which is usually lower than the market value of the property. The tax is accrued from the moment the property is officially put into operation and is payable annually.
In addition to the property ownership tax, owners are required to pay a garbage disposal tax (“danak smet”), which is paid along with the ownership tax. The amount of tax on garbage removal is determined based on the tax assessment of the property and ranges from 0.14 to 0.45% of this assessment.
Property rental tax
If you decide to rent out your property in Bulgaria for a long-term lease, you must conclude a rental agreement and provide a copy of it to the tax office before April 30 of each year. The rental tax is 10% of the annual rent.
If you plan to rent out your apartment yourself, for example, for daily rent to tourists, the law requires you to go through a housing categorization procedure, after which the municipality will determine the amount of tax.
In most cases, real estate is rented out through management companies, the cost of whose services on average is about 30% of the income received. But this is so by law. In fact, everyone rents as he wants. But, of course, we didn’t tell you about this.
We at Happy Elephant are ready to answer all your questions about tax legislation in your specific case upon first request. Therefore, contact us and be happy as an elephant.