I am hoping to sell a house in the future which I have spent a lot of money on. Question is, will I be taxed on the difference between my buying price and selling price. and do all the receipts i have for the refurb. count for anything? I have been told so many conflicting stories.

Hi dave b

Well, it's a really difficult question to answer without knowing all your circumstances.

First of all, of course you will be taxed on the difference between buying and selling price, when you sell your home - unless you are a Bulgarian resident, in which case you can sell a home within a financial year without taxation on the gain (bit like in the UK).

Given that you are not a Bulgarian resident, or that this is a second home you are selling within a year, then you will be subject to taxation (again similar to UK).

Is the property owned by you as an individual or via a Bulgarian company? If you have more than one property owned by that company, by selling this one house, your Bulgarian company will now become active and therefore this could affect future tax returns, etc. Have you submitted zero tax returns for the property if it is the only property owned by your company? What kind of receipts are they - proper invoices and payment was made via bank to bank;
or paid cash, if so, do you have a till receipt? Will the price of the sale take your company over the VAT threshold? Are you selling to foreigners - you might like to consider a new Bulgarian law which will mean every Bulgarian company doing business with overseas has to be VAT registered......

A myriad of questions, I know - sorry :(

It would be best to take proper professional accountancy advice so that you can be sure of your stance and financial situation.

Very good luck,

FlorryB wrote:

Hi dave b

Well, it's a really difficult question to answer without knowing all your circumstances.

First of all, of course you will be taxed on the difference between buying and selling price, when you sell your home - unless you are a Bulgarian resident, in which case you can sell a home within a financial year without taxation on the gain (bit like in the UK).

Given that you are not a Bulgarian resident, or that this is a second home you are selling within a year, then you will be subject to taxation (again similar to UK).

Is the property owned by you as an individual or via a Bulgarian company? If you have more than one property owned by that company, by selling this one house, your Bulgarian company will now become active and therefore this could affect future tax returns, etc. Have you submitted zero tax returns for the property if it is the only property owned by your company? What kind of receipts are they - proper invoices and payment was made via bank to bank;
or paid cash, if so, do you have a till receipt? Will the price of the sale take your company over the VAT threshold? Are you selling to foreigners - you might like to consider a new Bulgarian law which will mean every Bulgarian company doing business with overseas has to be VAT registered......

A myriad of questions, I know - sorry :(

It would be best to take proper professional accountancy advice so that you can be sure of your stance and financial situation.

Very good luck,

Thanks for reply.. Simple like I thought! 2nd house was bought with cash. Have an active company. Have put in tax returns for 3 years. No earnings as such as we have been putting all time and money into rebuilds. All receipts are in Company name mostly from large builders supplies. We have 2 more properties in same village in the Company name, being re-furbed too. We are changing our accountant this year so obviously will ask his opinion when we find another one? Can you tell me the Vat threshhold at the moment.

That is a very good point i never even thought of that,Vat Tax and the Bulgarian Legal System,i think its a minefield,and as most of us are new to this country we dont know how everything works







Mike

Neither do most of the advocates and accountants I have spoken too??

VAT threshold currently 50,000 lv in a financial year (Jan 1 to Dec 31). The key to the tax you'll pay on profit is the difference in the price which is on the deeds: when you bought and when you sell.

If the property is owned through the company, you will pay 10% tax on the gain. It is corporation tax and is a 10% flat figure.

Thanks for that information be very useful if we ever decide to sell


Mike

Yes thank you for the information its useful just in case you decide Bulgaria isn't for you thank you

Remember though, that this is the tax on gain made through a company in Bulgaria. This is not the same if you own a second home here and are living in, say, the UK, where taxes made on a second property are much higher, even after taper relief

FlorryB wrote:

VAT threshold currently 50,000 lv in a financial year (Jan 1 to Dec 31). The key to the tax you'll pay on profit is the difference in the price which is on the deeds: when you bought and when you sell.

If the property is owned through the company, you will pay 10% tax on the gain. It is corporation tax and is a 10% flat figure.

Thank you for information. I think like most who bought here a few years ago, what we paid is not on the deeds, because of the
seller not wishing to pay taxes!. Of course when you come to sell it's then your problem! Of course the answer is to put 10% on the price of the house, if you can. Maybe genuine house prices will have to come in, although I have been told this discrepancy is a very European thing to do.