Buyers Guide
As a future investor this buyers guide is something that you should read. People who are interested in buying property are either looking for a property for Capital gain or a second home to use as a holiday home or for retirement. However there is a steady increase of people who quite simply want
to buy property for investment.
Along with the many other attractions of moving to Bulgaria, the rise in tourism and now that Bulgaria has joined the EU property values are increasing at a steady and consistnet rate. The Bulgarian property market offers increasingly attractive investment opportunities with long-term prospects in this ever fast developing and up and coming country. There are many opportunities for investors with a small amount of capital.to purchase property in Bulgaria and it is giving substantially better returns for money than in other European real estate markets.
Actually buying in Bulgaria is basically the same as buying anywhere else. In fact, with experts at hand is much easier and certainly less stressful than in the UK. There are of course some differences and that’s why we hope we can cover the main areas of importance with a buyers guide to Bulgaria:
What Real Estate is For Sale?
£40,000 may buy you a villa close to the sea with rural properties being offered from less than £5,000. But be aware that the properties although seemingly very cheap will almost certainly require renovation and modernisation to bring them up to the standard accustomed to in Western Europe.
Also in the older and more traditional style of properties and also the more remotely situated properties they tend to be exceptionally cheaper in comparison to their more popular situated counterparts. You should see the property first hand in order to access the surrounding area and exact position.
There are New developments which are constantly under construction. More so in ski resorts, along the coast but now also in rural areas. This is where "New Builds" are to be bought 'off plan'.
Foreigners Owning Property in Bulgaria - The Law!!!
Foreign investors can buy property but not the actual land it is built on. The requirement to enable investors to buy property with land is the setting up of a Bulgarian company, the company would legally own the land and the buildings.
Now that Bulgaria is part of the EU this will no doubt change by 2014 in the meantime a company is still needed for land ownership.
‘If purchases include land a Bulgarian Limited Liability Company (EOOD or OOD) will be required to be formed’. This is not a difficult process but requires the services of the solicitor and a good estate agent to complete.
How To Set up a Limited Liability Company........
A company bank account has to be opened to collect all the capital, (shares). The minimum amount of share capital that is required is currently 5,000 leva. These funds are available to be withdrawn once the company is registered.
The company owners are liable for all the company's business transactions and ongoing conduct.
this is in conjunction with the value of their shares in the company's registered capital. All articles of Incorporation are prepared read and understood then signed by all shareholders.
when the company is added to the Commercial Register it is then active. The entry of the company is made upon the instruction of a district court decision for the incorporation..
Documents required for the registration of a company with the court are:
- Articles of Association - Proof of registration of a unique name - Declarations from each shareholder - Proof that the registered capital has been paid. - A memorandum for appointment of Directors - Application for recording the incorporation in the court - Specimen signatures of the managers
The Bulgarian State Gazette’ which is the official state media. publishes all Bulgarian legislation and company formations.
You new company will be registered with Bulstat ( Part of the National Recording Agency) that will issue the company with a registration number.
The current time that new comany applications are taking is 35 working days
Forming and registration of new company can cost you between €500 – €700 unless your estate agents have a whole package price which uncludes ALL charges and fees
Other Charges Levied When Purchasing Property
Real Estate Tax
Apart form Corporate tax, no other taxes are applied on the transfer of real estate property. However, the transfer is subject to notary and municipal fees.
The actual amount of Notary fees paid is calculated on a sliding scale on either the buying price or the tax valuation of the property whichever is deemed to be higher.
Purchase tax paid to the municipality in which the property you have purchased is situated upon completion. This is curently based at 2% of the buying price of the property. Just like stamp duty in the UK significantly cheaper.
Local Taxes and Rates
Property tax is the liability of the owner of a building or a plot iand and you are obliged to pay.
The tax is basically 0.15% of the book value of the real estate but arable land is exempt from this.
The value of the plot will also be included in the tax base where the building is built on either State or municipal land.
In addition. owners also have to pay for waste-collection fees these fees are assessed at the time of registration with the municipality. But be aware fines are imposed where this registration is not completed within 60 days of purchase.
Value Added Tax (DDS)
Purchasing land and leases of properties for residential purposes are totally void of liability to VAT. The exception to this is if you purchase a new build from a developer.
Other real estate transactions have a statutory VAT amount to pay at the standard rate of 20%.assuming that the seller is registered for VAT.
The buyer is entitled to a VAT refund, provided that they are registered for VAT purposes.
This is merely designed as a summary to give you an insight of what purchasing a property involves
Doing your research before you travel to Bulgaria and familiarising yourself with the procedures may save you much time and money at the end of the day.
