Taxes on Real Estate in Bulgaria: What You Need to Know

Buying, owning, and selling real estate in Bulgaria comes with certain tax obligations. Understanding these rules will help you plan your expenses effectively and avoid potential complications. In this article, we will cover the main taxes related to real estate in Bulgaria.

1. Tax on Property Purchase

When buying real estate in Bulgaria, the buyer is required to pay a property acquisition tax, sometimes referred to as a local tax or registration fee.

Tax rate: From 0.1% to 3% of the property’s value. The specific rate depends on the location of the property and is determined by the municipality.

Who pays: The buyer is typically responsible for this tax.

Payment deadline: The tax must be paid before the property ownership is registered with the Bulgarian Land Registry Agency.

2. Annual Property Tax

All property owners in Bulgaria are required to pay an annual property tax.

Tax rate: Between 0.01% and 0.45% of the property’s taxable value.

How it is calculated: The taxable value is usually lower than the market value of the property and is determined by the municipality.

Deadlines: The tax can be paid in full by April 30 for a 5% discount, or in two equal installments (by June 30 and October 31).

3. Tax on Rental Income

If you rent out your property, the rental income is subject to taxation.

Tax rate: 10% of the income.

Expense deduction: For rentals to individuals, you can deduct 10% for presumed expenses. If you are registered as a company, expenses may be deducted according to accounting standards.

Reporting: A tax declaration must be submitted by April 30 of the following year.

4. Capital Gains Tax on Property Sales

If you sell property that is not your primary residence or was purchased recently, you are required to pay capital gains tax.

Tax rate: 10% on the difference between the purchase price and the sale price of the property.

Exemption: If you have owned the property for more than three years and it has been your primary residence, the tax may not apply.

Special rules for foreigners: Tax obligations are the same as those for Bulgarian citizens.

5. Additional Fees and Costs

Notary fees: These vary depending on the property’s value but typically range between 0.1% and 1.5%.

Registration fees: Paid during the registration of the property ownership in the land registry.

Municipal fees: Include costs for landscaping, lighting, and cleaning of surrounding areas.

6. Helpful Tips

Consult a lawyer: Tax regulations can change, so it’s essential to stay informed about current updates.

Seek professional assistance: When calculating taxes and preparing declarations, it’s advisable to work with an experienced accountant or tax consultant.

Verify the property’s taxable value: Ensure that the taxable base accurately reflects your property’s value.

!!!Taxes on real estate in Bulgaria are relatively low compared to other European countries. However, it’s crucial to consider them at every stage of ownership—from purchase to sale. This will help you manage your budget effectively and avoid unpleasant surprises. If you have any questions, feel free to contact our specialists for a consultation!