Legal and running costs in Bulgaria tend to be lower than those in the rest of Europe. There are notary and municipal fees, connected to the process of buying property in Bulgaria.
2 % municipal fee on the market price or book value is paid to the municipality, where the property is located.
The notary fee is paid on the higher of the market price or the book value of the property at varying rates, specified in a special notary chart. The maximum fee is BGN 3000 (EUR 1500)
In addition a notary fee of 0.1% of the value of the property is payable on registration
All foreign buyers purchasing real estate property must be aware that in Bulgaria there are such terms as “tax estimation price” and “purchase price“. The “tax estimation price” is for the purposes of real estate taxation and is much lower than the actual selling (purchase) price.
When you re-sell your property, convention in Bulgaria is that the new buyer pays the full transfer taxes.
Value Added Tax
Transactions with land and lease of property for residential purposes are exempt from VAT (Value Added Tax). All other real estate transactions are subject to VAT at the uniform rate of 20% assuming that the seller is VAT registered.
The buyer is entitled to a VAT refund, provided that it is registered for VAT purposes.
Transactions with land and lease of property for residential purposes are exempt from Value Added Tax.
Rental Income Taxation
The basis of the taxable rental income of a company, investing in Bulgarian real property is the gross rental income derived from the property deducted with property-related expenses and depreciation. Such expenses include repairs, maintenance, renovation and similar costs and interest on loans used for the acquisition of the property. The flat corporate tax rate is 15%.
For the properties owners there are 2 kinds of tax:
- Real estate tax, which is paid annually based on 0.15% of the book value of the property – the valuation is made from tax department and it depends on the place where the property is located. The most expensive area is the capital Sofia. ). The real estate tax applies to land (but not to agricultural land and forests) and buildings. The tax is payable regardless of whether the immovable property is used or not. The tax liability is on the owners of the immovable property.
- Annual waste-collection fee, which is calculated based on value of the property and depends of place and municipality – vary from 1.6 to 5 per 1000
Arable land is exempt from local taxes.
Local rates/living costs
- House insurance: around EUR 100-200 per year depending on the type of house, together with the belongings and furniture inside.
- Gas: the gas system network is not developed in Bulgaria yet. People here mostly use electricity to cook.
- Heating: there are central heating systems in the big cities: monthly costs for a 2-bedroom apartment around EUR 100. People also use charcoal and wood, which is a cheaper way to heat a house.
- Electricity, when used for cooking, light or hot water one pays about EUR 20 per month.
If you can only visit your property once a year you have different options to pay rates, electricity, water and insure the property without paying out large sums for property management:
Most of the Banks in Bulgaria support this kind of service. You must create Bank account for attendance of your communal consumptions (water, electricity, mobile and hospital phones). There are some documents required like: your last invoices and/or documents for ownership, etc. (it is depending from the Bank / service and you must ask the Bank staff about this). In this case – regular (once per month) the bills will arrive to the Bank and will be served from your Bank account. The Government Tax for your property can be paid entire year long and you can pay it during your stay in Bulgaria. The same is for the Insurance of the property. Most of the Bulgarian Banks have Internet Banking and you can transfer to/from your bank accounts via Internet.
You can pay your taxes through the payment portal Epay.bg. The only disadvantage – it is in Bulgarian language. There you must register your debit/credit card(s) and then you can make payments to Electrical company, Water support company, Tax Administration, etc.