Mortgage Possibilities and Conditions
Individual Taxation
Income Tax
Resident individuals are entitled to tax reliefs
Rental Income
Capital Gains
Value Added Tax (VAT)
Corporate Taxation – Income Tax
Real Estate Tax

Mortgage Possibilities and Conditions

Traditionally the Bulgarian financial system has not been very advanced and getting a mortgage from a bank to buy property has not been a commonly used method.

Today this has started to change as more and more Bulgarian banks are offering mortgages both to Bulgarian citizens, as well as foreign citizens.

Although the financial system has improved a lot it is still normally cheaper to get a mortgage abroad (securing it against your property at home) as the financial conditions are not very favourable. A Bulgarian bank would normally not cover more than 70-80% of the property value with a payback time of 20-35 years and the interest would typically be 9-10%.

The cost of getting a mortgage is about 1-2% of the total mortgage plus about 300Eur for the valuation of the property.

To get a mortgage from a Bulgarian bank you will need a clean credit record and the monthly mortgage payment cannot exceed 50% of your monthly income. Take into consideration that getting a mortgage in Bulgaria can take up to 1 month, so apply in advance.

Some promoters are starting to offer pre-arranged mortgages which make the process a bit easier, but it can still be highly recommended to compare the conditions of the mortgage with what you could get in your home country or with another Bulgarian bank.

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Individual Taxation

Residents are liable to pay tax on their worldwide income. Married couples are taxed separately.

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Income Tax

Income and capital gains from all sources is taxed at a flat rate of 10%. There are six types of income depending on the source:

1. Income from labor employment;
2. Income from sole proprietor’s enterprise;
3. Income from other types of economic activity;
4. Income from rents or any other vesting of rights or property for consideration;
5. Income from transfer of rights or disposal of property;
6. Income from other sources as well as income liable to final taxes

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Resident individuals are entitled to the following tax reliefs:

* Tax exemption for persons with impaired working capacity
* Tax exemption for personal voluntary social security and insurance contributions
* Tax exemption for personal social security contributions when retiring
* Tax exemption for donations

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Rental Income

Rental income is taxed at the standard 10% income tax rate. Income-generating expenses are deductible when computing for taxable income.

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Capital Gains

Capital gains are taxed at the standard 10% income tax rate. The inflation adjusted acquisition price or the taxable value of the property for the purpose of real estate tax, whichever is higher, is deductible from the selling price.

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Value Added Tax (VAT)

Land transactions and leasing residential properties are exempted from VAT.

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Corporate Taxation
Income Tax

Income and capital gains by corporations are taxed at a flat rate of 10%. Income-generating expenses are deductible in computing taxable income.

Corporate income tax must be remitted on or before 31 March of the succeeding year.

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Property Tax
Real Estate Tax

Real estate tax is around 0.15% of the sale or purchase price of the property to be paid quarterly in the end of months March, June, September and November. Alternatively, the taxpayer can pay his real estate dues in one installment by 31st March to avail himself of a 5% discount.

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