Taxes and fees for purchase and ownership of real estate in Bulgaria

The acquisition of real estate in Bulgaria requires a notarial deed, which is drawn up by the notary responsible for the respective area in which the property is located. The notarial deed needs to be concluded before the notary and triggers certain taxes and fees.

Transaction Taxes / State Fee

According to art. 44 of the Local Taxes and Fees Act (LTFA) for the purchase of real estate a real estate transfer tax is due. The tax is usually paid by the purchaser of the property, unless otherwise agreed. If it is agreed that the tax is due by both parties of the purchase deal, they are jointly liable for its payment. The amount of the tax for the transfer of ownership of real estate is determined by the city council of the respective municipality at the location of the property. It is established in percentages of the higher from the following two values: the purchase price agreed between the seller and the purchaser or the current tax assessment of the property for the respective year. The tax assessment of real estates is determined by the municipal administration according to norms, regulated in Appendix № 2 to the LTFA, depending on the type of the property, location, area, construction and building depreciation. For example, the local tax for the purchase of a real estate in the municipality of Sofia as of January 1st 2020 is 3,00 %.

After its signing, the notarial deed is submitted to the Real Еstate Register at the Registry Agency by the notary on the same day. The entries, notes and deletions regarding real estates are made by order of the registry judge, who examines whether all legal requirements are met. The procedure for entry of the notarial deed in the Real Estate Register takes 3 working days. A state fee is due for the registration, which is calculated in accordance with the Tariff for the State Fees, collected by the Registry Agency. According to art. 2 of the said Tariff the fee is 0,1 % of the higher value ofthe purchase price or the tax assessment of the property. The fee is due by the parties as agreed between them, usually it is paid by the purchaser.

It is possible to transfer the above described taxes and fees to an escrow account of the notary performing the real estate transaction, who in turn pays the local tax and the fee to the Real Estate Register when submitting the notarial deed for entry. Bank fees for the escrow depend on the conditions and tariffs of the notary's bank.

Notarial Fees

Besides that, a notary fee is due, which is collected for the execution of the transaction of the real estate purchase. It is established in accordance with the Tariff for Notary fees to the Act on Notaries and Notarial Activity. The fee is paid by the parties as agreed between them. The amount of the notary fees is determined proportionally to the value of the certified material interest (the purchase price or the tax assessment) and is calculated by the notary according to art. 8 of the Tariff for Notary fees.

Current Taxes

Аs a result of the real estate purchase the new owner has the obligation to pay annually two types of local taxes for the property - property tax and municipal waste tax.

The property tax depends on its tax assessment, which changes every year depending on the criteria in Appendix № 2 to the LTFA and is recalculated as of each January 1st . For 2020, the tax in the municipality of Sofia is set at 1,875 per thousand on the tax assessment, and when the property is declared as a main residence the tax is reduced by 50 %. The property tax is paid every year in two equal instalments - the first until June 30th and the second until October 31st.

The municipal waste tax is also determined by the tax assessment of the real estate. For 2020, the tax is set at 1,6 per thousand on the tax assessment. Each year the tax is paid in four equal instalments – first by April 30th , second by June 30th , third by September 30th and the fourth by November 30th.

The two local taxes can be paid in cash at the cash desks of the municipality or by bank transfer – to the bank account of the corresponding local tax department at the location of the property. Upon payment of all instalments of the two taxes until April 30th 5% discount is granted. After the expiration of each of the above terms, interest is accrued on the unpaid obligation.

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