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 Buying a House or Property in Bulgaria

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PostSubject: Buying a House or Property in Bulgaria   Tue Sep 15, 2009 12:48 pm

First topic message reminder :

Buying a House or Property in Bulgaria;


Foreigners Owning Property in Bulgaria - The Law!

Foreign parties can buy property but not the land it is built on. The system used most frequently by foreigners to buy property with land is setting up a Bulgarian company. Being a Bulgarian entity, the company would legally own the land and the buildings.

The law is set to change eventually with the entry of Bulgaria into the European Union in January 2007. This is one of the reasons why Bulgarian property is so relatively cheap compared to Western and Central Europe. As it stands the ruling in place right now dictates that EU citizens will have the right to buy land in 2014, but in the meantime a company is still needs to be in place for land ownership.

The overview is:

‘If purchases include land a Bulgarian Limited Liability Company (EOOD or OOD) will need to be formed’.

This of course is not a difficult process but requires the services of a solicitor or a good agent to complete.
How To Set up a Limited Liability Company

Firstly. the company owners will be liable for all the company's business, transactions and ongoing conduct.

This is in conjunction with the value of their shares in the company's registered capital. All articles of Incorporation are prepared read or understood then signed by all shareholders.

A company bank account has to be opened to collect all the capital, (shares). The minimum amount of share capital that is required is currently 2 leva. These funds can be withdrawn once the company is registered.

From the moment it is added to the Commercial Register the company is a active. The entry of the company is made upon the instruction of a district court decision for the incorporation.

The Documents required for the registration of a company with the court are:

* Articles of Association
* Proof of registration of a unique name
* A memorandum for appointment of Directors
* Proof that the registered capital has been paid
* Declarations from each shareholder
* Application for recording the incorporation in the court
* Specimen signatures of the managers

All Bulgarian legislation and company formations are published in ‘The Bulgarian State Gazette’ which is the official state media.

However, this is not the end of the process. Your new company has to be registered with Bulstat ( Part of the National Recording Agency) that will issue the company with a registration number.

It can take anywhere between a few days to a few weeks to process the formation of your Company.

You need to allow between €500 - €700 in charges made in conjunction with the formation and registration of your new company.
Summary of Charges Levied When Purchasing Property
Real Estate Tax

Corporate tax aside, no other taxes are levied on the transfer of real estate property. However, the transfer is subject to notary and municipal fees.

The amount of notary fees you have to pay is calculated using a sliding scale on either the buying price or the tax valuation of the property whichever is the higher.

Payment of purchase tax has to be made to the municipality in which the property is situated upon completion. This is based upon 2% of the buying price of the property. Look at it like Stamp Duty in the UK.
Local Taxes and Rates

Property tax is a liability the owner of a building or a plot is obliged to pay. The value of the plot will also be included in the tax base where a building is built on a State or municipal land.

The tax is basically 0.15% of the book value of the real estate but arable land is exempt from this.

Owners also have to pay for waste-collection fees in addition. All these fees are assessed at the time of registration with the municipality. You should be aware that fines are imposed where this registration is not completed within 60 days of purchase.
Value Added Tax (DDS)

Purchasing land and leases of properties for residential purposes are totally void of liability to VAT. The exception to this is if you purchase a new build from a developer.

Other real estate transactions have a statutory VAT amount to pay at the standard rate of 20%. This is of course assuming that the seller is registered for VAT.

The buyer is entitled to a VAT refund, provided that it is registered for VAT purposes.
In Conclusion

This is merely a summary which is meant to give you an overview of what purchasing a property involves.

Finding a real estate agent that has your interests at heart and who you can come to trust is the best advice that can be given. There are some about!

Finding one is invaluable in all respects in helping you through all of the procedures, and not least to help you find the property of your dreams.

Doing your research before you travel to Bulgaria and familiarising yourself with the procedures may save you much time and money at the end of the day.

This is only a guide please ensure you check all facts with a qualified and registered Solicitor/Notary

Updated 10 May 2011

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PostSubject: Re: Buying a House or Property in Bulgaria   Wed Sep 22, 2010 5:43 pm

Here comes another one of my jaw dropping questions.
l have been told that if a property is bought with regulated land then if the owner of that property wishes to sell it to a developer.Then the property owner can pocket the money from the developer that bought the land for development.
But!,if a foreigner buys the property with the regulated land already in place,does not mean he owns the land because of what the legal system states a company must be set up before purchasing the property.Really the owner of that land is a company,but not the sole owner of the land.Does that mean the owner is really the company and can therefore profit from selling the regulated land.

Sorry for the prolong waffling.l do have a habit of saying something that takes time to get to the point :Tease:
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Carmen
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PostSubject: Re: Buying a House or Property in Bulgaria   Wed Sep 22, 2010 6:46 pm

I don't think I'm following what your saying but I would agree that its the company that owns the land and not you! however you are the director of the company but still your not the owner, I'm not to sure what it is exactly your asking so maybe some will be along to answer you better than I can
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Chris
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Sep 23, 2010 7:23 am

[You must be registered and logged in to see this link.] wrote:
l have been told that if a property is bought with regulated land then if the owner of that property wishes to sell it to a developer.Then the property owner can pocket the money from the developer that bought the land for development.

I'm not quite sure what you're asking, but I'll try to clarify things.

If you buy a property with land, and some of that land is regulated, then yes, the regulated land can be 'split off' and sold for development. However, as you are a foreigner, you do not 'own' this land, your Bulgarian Company owns the land. Therefore, its the Bulgarian Company that sells the land to the developer, not you as an individual. The money raised from the sale then has to be paid into the company bank account (which you have to set up when the company is created in order to buy the property in the first place).
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snail
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Sep 23, 2010 7:49 am

That's the key answer l was after.Thanks ChrisQBG
Now l know the company owns it and not the owner.But is the company the authorities and the profits from the developer goes to the council

Say for instance the foreign buyer bought a property that stipulates a large regulated plot with the property.Does the foreign buyer have any say in whether he can stop the developer from building on that land since he will not profit from it.

lf that is the case then would you agree unregulated land is more beneficial to the foreign buyer then the regulated land.l cannot see what the benefits are to the foreign buyer if he has no say in it, and will not profit from it.

l was told buying a property with regulated land will benefit the foreign buyer.How so easy it is to be dupe when ignorant of things.
The members are helping me a great deal from the knowledge l need to avoid a financial nightmare
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BGTRAVELLER
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Sep 23, 2010 8:34 am

Can someone please explain all this in simple terms I'm completely lost as to what is being discussed here I'm getting passed it or out of my depth
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ABC Property Surveyors.BG
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Sep 23, 2010 8:54 am

This is not Spain.I have not heard of land grab going on here by developers.Regulated land is more valuable than unregulated land as you can do something with it i.e Build on it subject to plans being approved.If you sell assets i.e land or a house you get the money as the company bank account is in your name.It get's a little tricky when you have multiple properties and you are selling at a declared profit.
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BGTRAVELLER
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Sep 23, 2010 8:58 am

I understand what your saying ABC but I'm no sure what the op is asking? I don't think he is asking such a simple question or am I reading this all wrong?
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bigsavak
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PostSubject: Re: Buying a House or Property in Bulgaria   Tue May 10, 2011 12:29 pm

I would say snail has some doubts about a property he is interested in if thats the case its best to walk away because you may live to regret it? buying a property in Bulgaria is very simple compared to most other countries and if something is nagging you about it and your not sure then look elsewhere
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nu2bg
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PostSubject: Re: Buying a House or Property in Bulgaria   Tue May 10, 2011 5:28 pm

Thank you for the update Admin, Its important to keep on top of these things especially for the new members who may not know.
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PostSubject: Re: Buying a House or Property in Bulgaria   Tue Sep 06, 2011 9:29 pm

Has the legislation concerning foreigners buying more than one house been changed recently. A friend of ours has informed us that Brits attempting to buy more than one property albeit in the name of a company have been told that the BG government have changed the law and this cannot be achieved legally in Bulgaria. At this moment we don't anticipate buying more than one property but you never know what the future may bring.

c s c s
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PostSubject: Re: Buying a House or Property in Bulgaria   Mon Oct 03, 2011 9:50 pm

Thanks for the update Chris
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PostSubject: Re: Buying a House or Property in Bulgaria   Sat Sep 21, 2013 6:47 pm

What is today’s law for purchasing property in Bulgaria. Do you still need to have a company?

Thanks
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Andy
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PostSubject: Re: Buying a House or Property in Bulgaria   Sat Sep 21, 2013 7:17 pm

No as far as I know you no longer need a company, this was only set up in the past in order for the company to own the land, however this has all changed see below.

The real-legal regime of the acquisition and exercise of ownership right on real estate in the Republic of Bulgaria by foreigners is regulated by the Constitution of the Republic of Bulgaria (Art. 22), the Property Act (Art. 29 and Art. 29a) and a number of other regulations containing specific rules - the Ownership and Use of Agricultural Land Act (Art. 3, Art. 3a, Art. 36, Art. 10a), the Forestry Act (Art. 23 and Art. 24), the Succession Act (Art. 5), the Protected Areas Act (Art. 10), etc.

The nationals of the member states of the EU or member states under the Agreement on the European Economic Area may acquire ownership right over land in accordance with the requirements specified in the law pursuant to the Treaty of Accession of Bulgaria to the European Union. By the end of 2011, foreign individuals have been restricted to possess the land of their second home. On 1 January 2012 this restriction dropped out and foreign investors are allowed to acquire the land on which their homes are built. However, the restriction is still valid in terms of ownership of agricultural land. It is expected to drop out on 1 January 2014.

[You must be registered and logged in to see this link.] ... e_Property
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PostSubject: Re: Buying a House or Property in Bulgaria   Sat Sep 21, 2013 10:08 pm

thanks for info.

john
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weasle
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PostSubject: Re: Buying a House or Property in Bulgaria   Wed Oct 16, 2013 9:20 am

How long does it actually take to buy a property in Bulgaria? I seem to keep coming across different time scales - not least in that sellers can stay in the property up to 1 month after completion.
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