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25 Vitosha blvd. fl. 2, Sofia, Bulgaria
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Working with clients on their most critical challenges often results in new industry perspectives and insights.
A main focus of our expertise is providing a full range of services to foreign and local clients regarding real estate transactions, incl. buying, selling, renting, making due diligence or investing in the real estate market.
We offer a complete legal assistance which includes full representation – from the stage of searching a cheap or luxury property, to the stage of the negotiations and preliminary sale agreements preparation. We fully assist you up to the finalization of the notary deeds for property acquisition and the closing up of the administrative procedures for registration of the acquired property for tax and statistical purposes.
Bulgarian Real Estate Laws – Assistance and Support
At Innovires, we know that real estate transactions in Bulgaria can be complicated and confusing. We assist clients to address a wide range of concerns, including:
- Buying, selling or renting a property in Bulgaria
- Providing professional legal advice and support in preparation of all kinds of documents related to real estate transactions
- Assistance with choosing an appropriate real estate agency/agent upon preliminary set criteria
- Complete due diligence process (obligatory in Bulgaria!)
- Tax planning
- Consultations regarding property acquisition, pricing, management, and disposition
- Negotiations and representation
- Assistance for obtaining a bank loan or giving a mortgage
- Assistance of changing the status of real estate
Our lawyers have extensive experience in the area of legal representation and court claims connected with construction defects of real properties in Bulgaria, contractor disputes, landlord and tenant disputes.
VAT rules that may apply to transactions
- If the seller is a physical person, buyer is physical person, no VAT
- If the seller is a physical person, buyer is company, no VAT
- If seller is a company, VAT is required IF the company registered for VAT, or if property value is over BGN50,000 (€25,510)
- If the seller is a company registered for VAT, and the buyer is a company registered for VAT, then the buyer can get VAT refund.
Our experience in the Bulgarian real estate market
Innovires represented and advised locals as well as foreign investors from almost all EU countries, USA, Middle East and Africa. We operate locally in Sofia and, at the same, time in all of the other regions of Bulgaria, including the well-known ski-resorts Bansko, Borovets, and Pamporovo, as well as Black Sea beach resorts – Sunny Beach, Burgas, Sozopol, Varna, Balchik and Golden Sands.
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Why Bulgaria
Real estate market
Bulgaria real estate market is pointed as highly dynamic. With an average of 41% growth in sales and 18% rental growth, the luxury property market is dynamically marking the first half of 2017, according to latest statistics. Up to November 2017, the increase in the prices of the properties in the capital – Sofia from the beginning of the year is approximately 14%. Another 10% is expected in 2018.
No restrictions
European Union citizens can now purchase properties in Bulgaria, including land. The 5-year moratorium on land purchases, set as a condition in the Accession Treaty between Republic of Bulgaria and The European Union, was lifted on January 1, 2014.
EU citizens and legal person are allowed to buy houses with gardens and regulated plots of land in Bulgaria on their own names.
What about non-eu citizens?
Foreign individuals from other that EU or EEA countries nationalities, cannot own land (this is a Constitutional prohibition). However, the Foreign Investment Law removed the restrictions on the acquisition of land by locally-registered companies with foreign participation. By setting up or joining a company incorporated under the Bulgarian legislation foreign persons can acquire full land ownership rights including ownership rights on agricultural land. Learn more here.
Bulgaria economy
Bulgaria’s economy expanded by 2.9% in 2017, an improvement from annual growth rates in 2016 and 2015, mainly due to higher net exports and public investment, according to the International Monetary Fund (IMF). The economy is expected to expand by another 3% in 2018, according to the IMF. Bulgaria is in top 3 countries in EU when it comes to economy increase.
Low interest rates
Interest rates in Bulgaria continue to decline. The average mortgage interest rate for BGN-denominate loans fell to a record low of 4.3% in 2017, from 6.34% in November 2014, according to the Bulgarian National Bank.
Rental returns increase
Sofia has moderate to good gross rental yields – i.e., the rental return on a property if fully rented out, before all expenses. Yields in the center were around 6.76% in 2017, up from about 4.7% to 5.7% in the same period last year, based on recent Global Property Guide research. Yields in the suburbs are also moderately good, ranging between 5% and 6.5% over the same period.
Taxes
Bulgaria has one of the lowest tax burdens in the whole EU and this applies also when it comes to real estate.
Real estate annual tax – 0.01%- 0.45%
Transfer tax – 0.1%- 3.0%
The rate is set by each municipality according to the location of the real estate. The taxable base can be the market price, specifically determined tax value or the gross book value. Keep in mind that there is no tax for agricultural land and forests.
