Buying a House or Property in Bulgaria;


Foreigners Owning Property in Bulgaria - The Law!

Foreign parties can buy property but not the land it is built on. The system used most frequently by foreigners to buy property with land is setting up a Bulgarian company. Being a Bulgarian entity, the company would legally own the land and the buildings.

The law is set to change eventually with the entry of Bulgaria into the European Union in January 2007. This is one of the reasons why Bulgarian property is so relatively cheap compared to Western and Central Europe. As it stands the ruling in place right now dictates that EU citizens will have the right to buy land in 2014, but in the meantime a company is still needs to be in place for land ownership.

The overview is:

‘If purchases include land a Bulgarian Limited Liability Company (EOOD or OOD) will need to be formed’.

This of course is not a difficult process but requires the services of a solicitor or a good agent to complete.
How To Set up a Limited Liability Company

Firstly. the company owners will be 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 or understood then signed by all shareholders.

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 2 leva. These funds can be withdrawn once the company is registered.

From the moment it is added to the Commercial Register the company is a active. The entry of the company is made upon the instruction of a district court decision for the incorporation.

The Documents required for the registration of a company with the court are:

* Articles of Association
* Proof of registration of a unique name
* A memorandum for appointment of Directors
* Proof that the registered capital has been paid
* Declarations from each shareholder
* Application for recording the incorporation in the court
* Specimen signatures of the managers

All Bulgarian legislation and company formations are published in ‘The Bulgarian State Gazette’ which is the official state media.

However, this is not the end of the process. Your new company has to be registered with Bulstat ( Part of the National Recording Agency) that will issue the company with a registration number.

It can take anywhere between a few days to a few weeks to process the formation of your Company.

You need to allow between €500 - €700 in charges made in conjunction with the formation and registration of your new company.
Summary of Charges Levied When Purchasing Property
Real Estate Tax

Corporate tax aside, no other taxes are levied on the transfer of real estate property. However, the transfer is subject to notary and municipal fees.

The amount of notary fees you have to pay is calculated using a sliding scale on either the buying price or the tax valuation of the property whichever is the higher.

Payment of purchase tax has to be made to the municipality in which the property is situated upon completion. This is based upon 2% of the buying price of the property. Look at it like Stamp Duty in the UK.
Local Taxes and Rates

Property tax is a liability the owner of a building or a plot is obliged to pay. The value of the plot will also be included in the tax base where a building is built on a State or municipal land.

The tax is basically 0.15% of the book value of the real estate but arable land is exempt from this.

Owners also have to pay for waste-collection fees in addition. All these fees are assessed at the time of registration with the municipality. You should be aware that 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%. This is of course assuming that the seller is registered for VAT.

The buyer is entitled to a VAT refund, provided that it is registered for VAT purposes.
In Conclusion

This is merely a summary which is meant to give you an overview of what purchasing a property involves.

Finding a real estate agent that has your interests at heart and who you can come to trust is the best advice that can be given. There are some about!

Finding one is invaluable in all respects in helping you through all of the procedures, and not least to help you find the property of your dreams.

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.

This is only a guide please ensure you check all facts with a qualified and registered Solicitor/Notary

Updated 10 May 2011

It would be good for newcomers to bg to have a checklist

This all sounds like good advice and I am up for saving as much as I can but not at the expense of maybe getting it wrong? is there anyway of knowing that what you have done is the correct way [You must be registered and logged in to see this image.]

that is why you must find or pay a bulgarian they know the right way, the going rate is about 5 lv an hour plus petrol if you dont use your own car. good luck! we have done it ourselves but we have been here 41/2 years now, I even registered the company at the bureau myself without a bulgarian with me and my bulgarian is not all that good, some companies will charge you over 100 euros for this

thank you Tony and redroyal all this information is very useful to us who know nothing and we all want to save a bit here and there so why not I have copied of this for my file thanks guys

sarah

Excellent post giving an imformative guide to purchasing property in Bulgaria [You must be registered and logged in to see this image.]

Lorka

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Wonderful posting, excellent advice - [You must be registered and logged in to see this image.] Well done Guys!! [You must be registered and logged in to see this image.]

Oddy

I am buying an off plan apartment, the site is in two phases and will not be complete until end of 2010 or to be more realistic early 2011. My question is when do we start paying local taxes, is it straight away on signing notary or when the site is complete. Your views will be appreciated.

Verygood wish i had all this when we bought ours


Mike

jac100 wrote:

I am buying an off plan apartment, the site is in two phases and will not be complete until end of 2010 or to be more realistic early 2011. My question is when do we start paying local taxes, is it straight away on signing notary or when the site is complete. Your views will be appreciated.

Don't quote me but I would have thought once it was finished? maybe this is something FlorryB might be able to give a definitive answer or another member

Admin wrote:

I would have thought once it was finished?

It should be when Act 16 is granted (Habitation Act), as prior to that the building as such is not 'habitable'.

However, you may have to start paying 'maintenance' for the building and facilities once Act 15 has been granted.

The answer to both will be stated in your contract.

Thanks, guys.

In the information on how to buy a house or property in Bulgaria is slightly outdated and just to inform people that as of January 2010 when starting a Company in order to buy the property you have to open a Capital bank account.

The Capital Account can now be opened with just 2 leva but banks will charge to open and close the accounts.


Deposit 5,000 leva (approximately 2,500) in a bank of their choice. This sum of money may not be withdrawn until the registration procedure is completed no longer stands

Hi Karen thank you for that update is it possible you could perhaps write an updated version of the procedure for Buying a House or Property in Bulgaria and we can then remove the older version? I do realise your busy with your work etc, but I'm sure it would be of great help to others.

ATB

Ah what a nice bunch of people on this forum - thanks for helping each other well done

Oddy