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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 These funds can be withdrawn once the company is registered.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

Weasle I have just read back a couple of pages and noted your post about sellers living in a house after completion. We sold our house to some very nice people (the wife is Bulgarian living in Britian). Our agent told us it would take 3 months to complete after the preliminary contract was signed in July, which was great for us as we had planned to leave end of October even if the house wasn't sold. Imagine our surprise when we were told completion date was end of August! We explained our plans for October and the new owners were informed. They gave their consent so all was well and we completed end of August. I have no idea why the agent told us it would take 3 months and as it suited us we didn't question it. However, it does answer your question about sellers still living in the house after Completion. Its up to the new owners to say yah or nay. Many things are so different here in Bulgaria and dependant on area too.
By the way, in these straightened times there is no guarantee that villages with bars, restaurants and shops will continue to have them. Our village had 4 bars when we arrived and 3 village shops. At present there is no bar as the owner of the only one is away and one big KOP shop (co-operative) which stocks everything and only 2 other very small shops. There are other changes too, much of which is probably down to money or lack of. We do still have village busses which are used well and go through other busier villages and many locals use it because few own cars. Brits are obvious with their 4x4s or two car owners. [You must be registered and logged in to see this image.] Having said all that, we are near Veliko Turnovo and I wouldn't have wanted to live anywhere else.

Again thanks for all the info.

I thought I might ask as well: can you bargain on the price of properties or is it a cultural no-no?

You can barter on anything in Bg so long as you are talking to the owner, many agents are very greedy and will not move on the price but owners will.

Thank you.

weasle wrote:

How long does it actually take to buy a property in Bulgaria? I seem to keep coming across different time scales - not least in that sellers can stay in the property up to 1 month after completion.

It's exactly like GinaA said, it takes a week and a month to get the keys unless the seller give you the keys at notary it happened few time when i used to sell houses

... and I posted in the wrong section!

On the property front, I must admit on first contact to be very impressed with the agents. Contact is very good, all the sites seem to have numerous photos of each house.
Okay, I know it's not a popular thing to say about estate agents (and I'll probably live to eat my words) but at least they put some effort in trying to sell.

I've moved it for you.

Thank you. Too many pages open at once!

weasle wrote:

... and I posted in the wrong section!

On the property front, I must admit on first contact to be very impressed with the agents. Contact is very good, all the sites seem to have numerous photos of each house.
Okay, I know it's not a popular thing to say about estate agents (and I'll probably live to eat my words) but at least they put some effort in trying to sell.

Please do your homework weasle - it is easy to buy in the wrong location. Look at some of the other posts of propery buying here in BG. Your first and most important item is to find the area you want to live in and not the house. Once you have decided on the location, finding the house is the next step. When you have decided where you want to live, try to find the mayor of that area, in most cases he will willing take you around to properties in the area and find some sellers, but not all sellers as they may not be available. But he can show you properies and give you prices which will give you a good idea of values and what is for sale.

Okay, location it is.

Sorry I have not read all the pages, but picking up on one point over the last couple of pages with regards to sellers staying in the property after it has been sold, after reading of some unpleasant stories from different people, the general consensus seemed to be that whilst it might sound a good idea having someone 'supposedly' looking after your purchase (usually rent free) whilst you are not there for a few months has not actually been that good for some people and therefore would not recommend it.

However, just because I can't remember reading of any really horrific stories, does not mean they have not happened, because I'm quite certain they would have.

This is true Phil-H there have been people still living in houses after a sale and hard to remove. One I know of was a Bulgarian who wouldn't move. As for us, we are very conscious that we have been allowed to stay and in return we are listing any little things that might be of interest like a list of names of our builder should they need more power points, the heating man in case they require info etc etc.and local helpers. It is down to the seller to agree to this which will be based on meeting the owner. We were living in our house at the time and had a long chat which cemented our friendship.
As for agents, I have found the agents I used very willing to negotiate and even recommended it for our first property. Agents have to work harder now to get a sale and have finally realised that it is a buyers market.
Recommending the village mayor can be done but not all mayors are good. Ours is but I think he has enough to do without becoming a property agent and in any case anyone in the business of selling will also need a commission. This is a very poor country and we have found the Bulgarians honest and reliable but its all down to personal experience and in our 9 years here we have always dealt with Bulgarian professionals and steered clear of any British involvement.

Oldun.

The only bad reports I have read is where it has been a Bulgarian national that has sold the property and been allowed to stay in it, supposedly for a certain length of time but then didn't want to move out as they still sort of felt it was their house.

I'm not saying it can't happen with for arguments sake another British person, but at least we can cuss, swear and threaten action in words we understand.

So as hard as it may sound it seems to cover all eventualities it is better to finalise with vacant possession, that way they have gone and no problems (apart from the EMPTY property standing empty until you move in).

Yes Phil-H the story I know of was a Bulgarian who refused to leave and gave the new owners big problems. I doubt that British people would do that and I know of no-one who has. It seems its quite unusual to have people still living in the property for sale which means its more difficult to know of any problems. At least our new owners have the confidence to know that we live in and love our house and able to help with anything they don't understand. Many disenchanted Brits leave nothing behind and just walk away if they can afford to. There is a property near us which was quite beautifully looked after by the previous owners who also had a great garden. They left nothing in the house and the garden is now a sea of weeds. Such a shame and its not selling because it has no character left in it. Very sad.