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Buyer's Guide of Bulgaria

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GENERAL INFORMATION

1. What is the currency of the country?
The currency of the country is the Bulgarian Lev, its ISO code is BGN. The Lev has a fixed quotation against the Euro and it is estimated that this quotation will be fixed to the entry of Bulgaria in the EU. Quotation EUR 1 = BGN 1.95579. They work with euro (the accounting of the companies is already made in Euro)

2. What was the revaluation of the housing price in the last years? Between 2005 and 2006 the increase of the average price of housing in Bulgaria has been of 15%.
During 2007 the revaluation of the housing has been of 30%.

3.What is the mortgage interest rate valid in Bulgaria?
According to the Central Bank of Bulgaria, the average rates of mortgages loans were of 7.63% in 2007. This rate is referenced according to the currency of the country (Lev). In terms of €, we are talking about 7.95%.

INFORMATION ABOUT THE PURCHASE

4. Where can I register in public deed the housing? Can Marina d’Or register on behalf of customers?
All purchase is registered in Bulgaria, before the Notary of the city where the real estate property is situated. In the case that customers cannot / do not desire to travel to Bulgaria, Marina d’Or offers him/her the possibility of registering on his/her behalf always that he/she grants a power of attorney from a notary. If this one is granted out of Bulgaria before foreign notary, the document should be legalized.

5. Are the sums I paid off endorsed?
Marina d'Or realizes a guarantee insurance to assure the sums paid off to the notary registration.

6. What conditions do the mortgages have?
The Interest Rate applied by banks for a period of 25 years fluctuates between 6.35% and 7%, taking as reference the €:
- The interest rates are variable and they are based on public references (SOFIBOR, EURIBOR or LIBOR) or own references calculated by the Banks.
- The mortgages finance between the 70% and 80% of the value of the real estate property, this value estimated by a person with license to value, in some cases it corresponds to the Bank, in others it is an independent one accepted by the Bank.
- The financing Term normally is 25 years, although the rank is between 20 and 30 years.
- Some of the banks undertake to take the decision on the application of the mortgage credit in terms from 2 days to 10 days. The cost of the study is around 10 and 20 euro.
- The initial commissions due to mortgages are from 1.5% to 2.0%, in some cases there is an annual commission of 0.25% on these quantities.

7. Can I subrogate to the mortgage made in the Country?
Yes.

8. In case of any legal discrepancy, which courts shall be in charge of it?
The Bulgarian ones.

9. What happens if I sell the housing unit after the purchase?
If you are resident in Spain, France, Ireland, United Kingdom or any other country in the EU we will distinguish between natural and artificial person:
Natural person: when selling the apartment, the income tax should be paid off in Bulgaria. Maximum percentage tax 24%. When carrying out the income tax in the country or origin Spain, France, Ireland and United Kingdom the sum paid off in the Bulgarian income tax will be deducted.
- Artificial person: when selling the apartment, the company should pay the Corporate Income Tax in Bulgaria. Maximum percentage to be paid off: 10%.
If you live in a foreign country not included in the European Union, every case should be analyzed independently.
When selling, in addition to the personal or corporate income tax, the Tax on Property Transfers that corresponds to the 2%, has to be paid off

10. In order to repatriate the investment realized in Bulgaria in the account of Marina d’Or, should I specify that the sum paid off is inflow of foreign exchange due to the purchase of a real estate property?
Yes, if you are resident in Spain, France, Ireland, United Kingdom or any other country of the E.U. If you reside in a foreign country not belonging to the European Union, every case should be analyzed independently.

INFORMATION ABOUT TAXES AND DOCUMENTATION

11. What kind of taxes should be paid off and what costs are generated when acquiring a housing unit in Bulgaria?
The local VAT is the 20%. In addition to this, the Notarial Fees and the Local Tax, corresponding to the 3%. In total 23%.

12. Is it necessary to pay the Real Estate Tax?
It does not exist any kind of municipal tax. In Bulgaria it is paid 1.5% as Possession of Real Estate Properties annually.
13. Can I deduce the VAT (Value Added Tax)?
If you reside in the European Union there are two possibilities:
- If the investor or particular company buys the apartment for its exploitation by renting it, etc. they should apply, through the Consulate, for the Number of Tax Registration that will allow you to deduce the VAT in Bulgaria.
- If the investor or natural person buys an apartment for personal use, they could not deduce the VAT.
If you reside in a foreign country not belonging to the European Union, every case should be analyzed particularly. It will depend on the existence of an agreement of double fiscal imposition or not.

14. Is it necessary to have Foreigner Identification Number if I acquire a housing unit in Bulgaria?
No. No. Only the Number of Tax Registration should be required if you acquire the housing unit for its exploitation and wish to deduce the VAT. This number is applied for, through the Consulate of Bulgaria, in the country of the purchaser.