Who Can Buy Property in Bulgaria?
All foreigners can generally buy property in Bulgaria; the main restriction is that currently it is not possible for non-Bulgarian citizens to own land (or a property with land).
Even though Bulgariah as just entered the European Community in 2007 they have got until 2014 to make the necessary changes to their legislation to make the market equal for all EU citizens.
This doesn’t mean that you cannot buy land or a property with land but you will have to do it through a Bulgarian registered company so you will first of all have to set up a Bulgarian company.
This can be done relatively easy though and within a couple of weeks your company could be ready. The price, including both taxes and legal fees, would be around 1000Eur and apart from this you will have to deposit 1750Eur-2500Eur which you will have at your disposal as soon as the company has been set up.
When you have found a property you would like to buy the first thing you will have to do, before you sign a contract or put down a deposit, is have your lawyer go through the legal situation of the property (like the ownership, outstanding debts and charges against the property).
When this has been done and if there are no problems then the next step would be to sign a private contract. The private contract (also called preliminary contract) sets out all the conditions of the sale like price, how it should be paid, the state of the property, date of sale, etc.
Upon signing the private contract the buyer normally pays down payment equalling 10% of the property price for second hand properties and 10-30% of the total price for new developments. Your lawyer should always create or, at least, see this contract before you pay the deposit. The amount paid needs to be clearly included in the private contract. If you are not able to be present when signing the private contract your lawyer can do this for you with a power of attorney.
It is still normal in Bulgaria to pay the initial deposit in cash but a bank transfer can usually be arranged.
Signing the Title Deeds
To make the purchase of the property legally binding you will have to sign the title deed in the presence of a Bulgarian notary and thereafter register the title deed in the register office.
The date for signing the title deed will be stated in the private contract but before this date there are some things you will need to prepare.
First of all, you will need to have the money ready. If you are planning on financing the purchase with a mortgage from a Bulgarian bank take into consideration that this can take up to 3 months to clear. If you plan to transfer the cash from your home country it can be recommended to set up a Bulgarian bank account so that you can transfer in the funds from abroad.
To make the title deed binding both the seller and buyer (or a representative with a power of attorney) will have to be present at the notary, if you do not speak Bulgarian an official translator will also have to be present. The notary will then confirm the identities of each part and make sure that all the documentation is in order before you sign the title deed. At this stage the property will officially change ownership and the notary will then register the new title deed at the official property register.
When the title deed has been signed you will then have to pay the total outstanding amount to the seller which can either be done with cash or you can transfer the funds to the seller from your local bank in the presence of the seller after the signing the title deed (bank cheques are still very new in Bulgaria and not used very frequently).
The last step would be for your lawyer to register your property with the tax authorities so that you can pay the annual property tax which will have to be done within a week after signing at the notary.
Why acquire real estate in Bulgaria?
Bulgaria is one of the newest members of the European Union. It walked a very hard way to become part of the European Union, passed through a long transition and accomplished a judicial reform so that the Bulgarian legislation corresponds to the requirements of the member states of the European Union.
According to the operative regulation after the registration in the Companies Register the company can acquire real estates on the territory of the Republic of Bulgaria as it has already been registered as a legal entity.
If you do not have the possibility to come personally for the completion of the deal for buying a property, in the Power of attorney which you sign before the Notary Public in the presence of an authorized translator, you have the opportunity to indicate a person, who can acquire on behalf and at the expense of the company the property chosen by you. For that purpose, it is necessary for you to send a deposit of 10 % of the property price.
In case you change your decision of buying the property, the deposit is not refundable. An obligation of our company is to prepare the documents, necessary for the real estate sale and to check the property for real burdens, so the rights of the buyer will be guaranteed. The title deed will be translated in English, as the rest of the price for the property is to be paid in the day of conclusion of the deal.
Something which is necessary for you to know, is that every current year two taxes are to be paid – “Property tax” and “Waste tax” , which are assessed, according to the tax valuation of the property.
According to the Bulgarian legislation, every company , no matter active or not, whether it gains incomes or not, is subject to an end-of-year accountancy, and obligatory promulgation of the Annual Financial Statement of the company, which has to be done by July 01 of the year that follows the year of registration.
The following documents have to be prepared: AFS /annual financial statement/, tax declarations from the accountant, which prove that the managed by you company is not active and has not gained any profit from the commercial activity.