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Procedure of buying property
How to buy property in Bulgaria:
Buying property in Bulgaria is a relatively straightforward procedure. We've broken the process down into a few simple steps - follow these and you'll soon be the proud owner of a new property in Bulgaria! 1. Find your property Browse our site to find the property that suits your needs best but bear in mind the following: Many new developments, especially on the coast, are sold "off plan" which means that they are currently under construction. You need to ensure that the relevant terms and conditions are included in the preliminary contract - ask your legal advisor for assistance. 2. Set up a limited company: Foreigners are permitted to buy buildings in Bulgaria but not land. If you are not a Bulgarian national, we recommended setting up a limited company that will then own both the real estate and the buildings on the land. If you are buying an apartment, it may not be necessary to form a limited company - check with the property agent whether a direct purchase is permitted. What is a limited company? As shareholder in a limited company you are liable for the company's financial commitments up to the value of your share in the company's registered capital ie: if the company incurs any expenses or debts your liable is limited to the full amount of your investment in the company. Who can set up a limited company? Essentially anyone can form a limited liability company in Bulgaria - you do not have to be Bulgarian to do so. This enables foreign nationals to purchase Bulgarian property indirectly. How do I set up a limited company? Before signing any agreement you should agree with all the other shareholders what commercial activities the company will be involved with and agree the structure of the company. Once you have all agreed on the nature of the business, the relevant documents for incorporation will be prepared by your legal advisor and signed by all the shareholders. Next you will need to open a dedicated company bank account to collect all share capital. The minimum share capital necessary to form a limited company is 5000 leva, of which a minimum of 70% (3500 leva) is required at the time of registration. As well as your share capital you will be required to pay administration costs for the registration. Don't forget you will still have the money in the company. Your limited company will officially exist as soon as it is added to the Commercial Register of the district court, in the region where the company will be based. This entry is made as soon as the district court make a decision to permit the incorporation of your company. When you submit your registration application you will need to provide the following documentation: o Proof that each shareholder has paid into the company at least one third of the total amount of his or her financial interest, amounting to no less than 10 leva. In order for any law to take effect, all Bulgarian legislation has to be published in the official Bulgarian state newspaper, the Bulgarian State Gazette. Publication of your company's entry in the commercial register is a public declaration of your formation. Finally, you will need to register your company with the National Tax Register Authority to complete the process of formation. Following registration, once you have paid your entire share capital you can withdraw funds from the company to make your property purchase. Now you've formed your company you can get on with buying your property. 3. Make sure you know about the taxes In Bulgaria, as with pretty much everywhere else, property transactions are subject to tax. It's important that you factor these charges into your financial planning. Transfer taxes Notary fees are payable on the transfer - rates vary but the maximum is around BGN3500. VAT of 20% is payable on all real estate transactions except with land and lease of property is for residential use. The buyer or lessee can claim a VAT refund provide they are registered for VAT. 4. Put down a deposit on your property Once you've found the property you want, you will need to place a deposit to reserve it. The deposit is usually 10% of the selling price and is refunded on completion of your purchase. At this you will pay a commission to the property agent who will then take the property off the market while you begin the purchase. 5. Sign an initial contract of sale When we receive all our cleared funds our solicitors will draft an initial contract, which contains details of all the relevant terms and conditions, monies paid and any other information relating to the property transaction. Once this contract is signed, searches are carried out to make sure that the titles deeds are valid, that any relevant licenses and permissions are taken into consideration, that any debts on the title are brought to light, and that the terms of the final contract are agreeable to both buyer and vendor. 6. Sign the Notary Act The last step in the buying process is to sign the Notary Act - essentially an official declaration that you have agreed to buy the property. At this point any state and municipal taxes must be paid and any outstanding balance of monies must be paid to the vendor. The title deed of the property is then transferred into your company name. Congratulations - you're now the owner of a Bulgarian property! |