Buying a holiday home or investment
property in Bulgaria is not as difficult as you might
think.
There
are no restrictions on foreigners owning property in Bulgaria,
although the ownership of land is presently restricted.
This means that direct ownership of an apartment is normally
acceptable, but that direct ownership of a house is not permitted.
Of
course, this does not mean that you cannot own a house or land
in Bulgaria - simply that you will need to setup a Bulgarian
limited company through which you will purchase the
house and its land.
This may seem intimidating but is a well-established process
that all estate agents and solicitors dealing with foreign buyers
are very familiar with.
Step 1 - Setup Your Company
If you are planning to by a house in Bulgaria, rather than an
apartment, it makes sense to setup your limited company before
you start the search - that way there is one less potential
delay further down the line.
Setting up a company will require you open a Bulgarian bank
account and place a deposit in it, most of which you will be
able to withdraw again afterwards.
Step 2 - Make An Offer & Agent's Fees
Once you have found a property in Bulgaria that you'd like to
purchase, you negotiate the price and agree a sale verbally.
It's also customary in Bulgaria for buyers and sellers to split
the agent's fees - typically 6% - between them.
While
this is normal, it isn't guaranteed, so you should check what
the arrangement is with the property you are buying. If you
are buying a new-build property from a developer, of course,
the situation will be different.
Step 3 - Preliminary Agreement
At this point you will be required to pay a 10% reservation
deposit to the property agent and will need to engage a solicitor
to draw up an initial contract of sale (preliminary agreement).
You
will also need to ensure that the solicitor carries out all
necessary legal searches and checks to verify the title of the
property and to ensure it has no debts attached to it.
As in most European countries, in Bulgaria debts remain attached
to a property even when its ownership changes.
The preliminary agreement will set out the terms and conditions
of the sale and will be legally binding. Unless there are title
or debt issues with the property, you will now be committed
to completing the purchase.
Similarly, if the seller now withdraws, they will be obliged
to pay you twice your deposit as compensation for the lost sale.
Step 4 - Completion
Once you have the results from the legal searches, you should
be ready to complete.
Like almost all European countries, Bulgaria has a system of
Notaries Public - public solicitors - whose
job it is to oversee the transfer of properties and register
the owners' details with the land registry.
At this point you will have to pay various fees and taxes for
which you should allow approximately 5% of the purchase price.
This includes:
Local
Property Tax: approx 2%
National Registration Tax: 0.1%
Notary's & Solicitor's fees
If
you are buying through a company you may also have to pay a
corporate tax on the property transfer - you should ask the
advice of your solicitor on this matter.
It goes without saying that you should ensure that you employ
an independent, English-speaking solicitor
to represent you throughout the purchase and should not sign
any documents that have not been translated for you.
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