Property in Bulgaria - registration and tax
One of the advantages of buying Bulgarian property is the relative ease of the purchasing process. The tax system relating to property in Bulgaria is not as complicated as in other countries, either. However, there are traps for the unwary in any system so it a good idea to be familiar with the relevant issues before you start looking in earnest for your new home in Bulgaria.
Registering ownership of your home in Bulgaria
Ownership of Bulgarian property passes to you as soon as the notary deed (final contract) is signed and final payment made. The notary official is responsible for registering the change of ownership in the local land registry.
Taxes on property in Bulgaria
Ownership of Bulgarian property passes to you as soon as the notary deed (final contract) is signed and final payment made. The notary official is responsible for registering the change of ownership in the local land registry.
Taxes on property in Bulgaria
Apart from a 2% municipal tax (stamp duty) paid on completion of the buying process, Bulgarian property is subject to only two minor local taxes:
- Annual property tax - The equivalent of the UK´s Council Tax, this annual bill is 0.15% of the registered value of your Bulgarian property.
- Waste collection tax - Typically, this annual tax is less than 20 GBP. For a rural home in Bulgaria, it may be as little as 5 GBP.
Wealth and capital gains taxes for owners of Bulgarian property
- There are no wealth taxes in Bulgaria. Nor is there a specific capital gains tax. Instead, any gain made by the disposal of property in Bulgaria is treated as income - either personal income or corporate income.
Wealth and capital gains taxes for owners of Bulgarian property
- Corporate income: If you have bought your property in Bulgaria through a limited liability company, any capital gain on its sale will be subject to 15% corporation tax. The gain will be calculated from the value stated on the title deeds.
- Personal income: If you have bought your home in Bulgaria as an individual, you may not have to pay any tax on a capital gain! If the property was your main residence for at least three years, it is exempt from capital gains tax. Similarly, no tax is payable when you make a profit on two properties, so long as you have owned them for at least five years.
Inheritance tax relating to Bulgarian property
If you are living in your home in Bulgaria and have residence status, you are liable to inheritance tax on both Bulgarian property and overseas property. If you are living in your home in Bulgaria without residence status, you are liable to inheritance tax only for Bulgarian property.
Inheritances received from a spouse or direct relative are exempt. Brothers, sisters, nieces and nephews who inherit pay tax of 0.7% on values above 250,000 Lev. All other beneficiaries pay tax at rates of up to 20%.
Other taxes relating to Bulgarian property
A flat 20% deduction is available against any rental income received ie only 80% of income received from your Bulgarian property is subject to income tax. For non-residents only, 15% of this is withheld at source.
If your property in Bulgaria is owned by a limited liability company rather than you personally, your business must file annual returns and pay tax of 15% on any income generated by your Bulgarian property. However, if you are personally the owner of your home in Bulgaria, your personal tax liability for any rental income depends on your residence status.
