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Financial Legal And Taxation Issues Of Purchasing In Bulgaria
ot the most interesting of legal advice, before agreeing to
subjects, but extremely any payment plan.
important nonetheless!
Before it is possible to realize With so many providers, it is
the dream of purchasing a virtually impossible to give a
property in Bulgaria, it is definitive answer as to which
important to have a good idea of option will prove the cheapest in
how the purchase will work for any individual set of
you, financially and legally. circumstances. As a general rule,
Issues such as how a property can most individuals who have a
be funded and what the purchase relatively straightforward
process is are vital, if you do financial situation will be
not want to end up with a nasty better off raising the cash
shock further down the line. against their existing property.
Although interest rates are low
Bulgarian Mortgages in Bulgaria, the choice of
companies that offer mortgages to
When purchasing in Bulgaria, an foreign investors is extremely
investor has two key options: limited, resulting in limited
buying via a local Bulgarian bargaining power and therefore
mortgage provider, or raising the fewer deals.
cash in their home country and
buying the property for cash. At the time of writing, the only
There are, of course, companies three companies that offer
that sell off-plan properties mortgages to foreign individuals
that offer their own financing are the Greek banks Piraeus, DSK
structure. However, investors and BulBank. Mortgage rules in
should be particularly wary of Bulgaria are rather simple and,
these companies and should always in general, a UK citizen earning
obtain independent financial and at least £15,000 a year can
obtain a mortgage for up to One of the most fundamental
200,000 Euros. Interest rates are issues, at the moment, for
around the 6 to 7 percent mark, foreigners hoping to purchase a
but only 70 percent of the Bulgarian property, is that under
property’s value can be borrowed the Constitution of the Republic
and the term is set at 20 years. of Bulgaria, anyone who is not a
These restrictions mean that it citizen of Bulgaria cannot own
is often better to consider a property, personally. Actually
‘home’ mortgage and then to buy the law states that you cannot
in cash. own land, but can own buildings,
but this, in reality, does little
Another potential issue with to help the situation!
Bulgarian mortgages is that they
take a lot longer, This will eventually change after
administratively, than most other Bulgaria joins the EU, but
countries. Expect the process to investors should not expect to be
take somewhere in the region of able to hold property directly
12 weeks. Also, if you are buying until around 2014.
off-plan, be aware that you will
often be unable to obtain the Instead, foreign investors will
full mortgage value until the have to set up a Bulgarian
property is complete, although company which will then purchase
there will be staged payments and own the property. Although
normally expected throughout the this sounds complicated, the
build process. Make sure that you process in fact is relatively
consider how these payments will easy and only costs around £700.
be met.
Be aware as well that it is
Legal Issues common place in Bulgaria to
expect a purchaser to sign a
power of attorney to allow issues on the ‘tax estimation price’
such as insurances to be dealt which is set by the vendor or his
with. Many foreign investors are agent. Generally, this price is
wary of this procedure, as it is much lower than the actual sale
not common place in countries price. Bear this in mind when
such as the UK. reading the advertisements and do
not expect to be able to buy a
Taxes property for its tax estimation
figure.
A foreign investor will normally
be taxed in line with the country When purchasing abroad it is
where they are resident; any vital that you receive English
gains will have to be declared in speaking, knowledgeable and
their annual tax returns in their independent advice, so that you
country of residence. When can be certain that you are
purchasing a property in getting the best deal possible,
Bulgaria, investors are subject both financially and legally.
to a purchase tax. This is based
About the Author:
Providing essential information on buying Bulgarian property, Tem Pearson is dedicated to offering all the necessary information for people looking to buy property in Bulgaria. Visit www.buying-property-abroad.info/Bulgaria.
Read more articles by: Tem Pearson
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