Real estate taxes in Bulgaria

Please note! Warning: tax laws, notary instructions, the “Notary Act”, and municipal regulations may be amended at any time, therefore this article cannot serve as a guide for paying taxes and fees on real estate, but is for informational purposes only.

This article lists (with examples) the taxes and fees levied in connection with acquiring real estate in Bulgaria, namely upon purchase, inheritance, or receipt as a gift.

Tax on the purchase and sale of real estate

The tax on the purchase of real estate in Bulgaria is the same for non-residents (foreigners) and for citizens. When purchasing houses, apartments, commercial properties and agricultural land, as well as when buying a car, a municipal tax is paid in the amount of 0.1% to 3% of the tax valuation of the property. Each municipality in Bulgaria independently determines the amount of this tax. Usually, the municipal real estate tax in Bulgaria for Russians, citizens of Ukraine, and Israel in 2021, as well as for Bulgarians, amounts to about 2-3% of the tax value of the property. 

How to find out the cadastral value of an apartment

To find out the tax value of a property, you need to request a certificate from the local tax office. Alternatively, you can grant a power of attorney to a realtor or a lawyer and they will order and obtain this certificate.

In addition to the municipal tax, when purchasing real estate in Bulgaria you must pay the following fees:

The fee for registering the property in the Unified State Register of Real Estate —  0.1% of the tax valuation of the property, but not less than 10 BGN.
Notary fee — the notary’s remuneration plus 20% VAT. This remuneration is provided for by the Law  “On Notaries and Notarial Activities”.

Notary tariffs in Bulgaria for registration of transactions with movable and immovable property, according to the same Law, are the following:
When buying and selling real estate with a value

• up to 100 BGN (50 euros) the notary fee is 30 BGN.
• 101-1000 BGN — 30 BGN + 1.5% of the amount exceeding 100 BGN.
• 1001-10,000 BGN — 43.50 BGN + 1.3% of the amount exceeding 1000 BGN.
• 10,001-50,000 BGN — 160.50 BGN + 0.8% of the amount exceeding 10,000 BGN.
• 50,001-100,000 BGN — 480.50 BGN + 0.5% of the amount exceeding 50,000 BGN.
• 100,001-500,000 BGN — 730.50 BGN + 0.2% of the amount exceeding 100,000 BGN.
• over 500,000 BGN — 1530.50 BGN + 0.1% of the amount exceeding 500,000 BGN, but not more than 6000 BGN.

Example: when buying a home in Burgas for 100,000 BGN, the buyer must pay the following taxes and fees:

• Municipal tax (in Burgas — 3% of the tax value of the property) — 3,000 BGN.
• Fee for registration in the property register (0.1%) — 100 BGN.
• Notary fee — 730 BGN.

Total: 3,830 BGN.

Tax on the sale of real estate

Income received during the calendar year from the sale of real estate is not subject to taxation if it has been in your ownership for more than 3 years.

For completeness, we note that when residential real estate is sold as the first one during the relevant tax year, and it was received by the seller through inheritance or a will, the proceeds from the sale are exempt from tax on other grounds — on the basis of clause 26, paragraph 1, Article 13 of the VAT. In this sense, the sale of inherited or, accordingly, bequeathed property will not be considered a sale of residential real estate within the meaning of Art. 13, para. 1, item 1, subpar. “a” of the Personal Income Tax Act, and the owner can carry out another sale of real estate, the income from which will not be subject to taxation.

Income received during the calendar year from the sale of no more than two real estate properties is also not taxable if more than 5 years have passed between the date of purchase and the date of their sale. Income from the sale of agricultural and forest properties is exempt from taxation regardless of their number, if more than 5 years have passed between the date of acquisition and the date of their sale.

In all other cases, your income from the sale of real estate is subject to tax.

The tax base is calculated by reducing the positive difference between the sale price and the purchase price of the property by 10% of the value, i.e. the income received in cases when the property is sold at a higher price than the one at which it was bought is subject to taxation.

Tax on gift and inheritance of real estate

In Bulgaria, heirs of the first line, i.e. the children, spouse and parents of the testator, do not pay inheritance and gift tax. Other heirs must pay inheritance tax, but only if the tax value of the inherited real estate exceeds 250,000 BGN. In this case, the heirs will have to pay: 0.4% - 0.8% for the brothers and sisters of the testator and 3.3% - 6.6% for all other heirs on the amount exceeding 250,000 BGN.

Brothers and sisters who receive a gift pay a tax of 0.4% - 0.8% of the tax value of the property, while all other persons pay a gift tax of 3.3% - 6.6% of the tax value of the property. That is, if a person receives a gift in the form of property worth 100,000 BGN from a brother or sister, they will have to pay from 400 to 800 BGN (depending on certain conditions), and if they receive real estate as a gift from more distant relatives or from someone unrelated, they will have to pay from 3300 to 6600 BGN.

Tax on owning real estate

The real estate tax is levied regardless of whether the property is used. The tax is determined by the employees of the municipal administration, after which it is communicated to the liable person or their legal representative.

Determination of tax and features of taxation in Bulgaria

The basis for determining this tax is the tax valuation of the real estate as of 1 January of the year for which it is payable. If during the year there is a change in the tax valuation of the property, the amount of tax is determined based on the new tax valuation from the month following the month of the change. This does not apply to non-residential real estate belonging to enterprises or on which a right of use has been established.

The municipal council determines by ordinance the rate of tax within the range of 0.1 to 4.5%  of the tax valuation of the real estate. The tax valuation of citizens’ property is determined by the city administration depending on the type of property, location, area, construction and moral depreciation.

For real estate that is a person’s main place of residence, the tax is levied with a 50% discount. For the main residence of a person with reduced working capacity from 50 to 100%, the tax due is reduced by 75%. These circumstances are declared upon acquisition of the property or when they arise later.

Deadlines and methods of paying taxes

The real estate tax is paid in two equal instalments — from 1 March to 30 June and by 30 October of the year for which it is payable. A 5% discount can be used when the tax is paid in full from 1 March to 30 April.

How to pay real estate tax in Bulgaria

Real estate tax in Bulgaria can be paid at the local tax office by presenting the Bulstat number, passport or notary deed. 

If you have an account with a bank in Bulgaria, your real estate tax can be debited automatically; however, you first need to set up this service with a consultant.

Real estate taxes in Bulgaria for Russians, Ukrainians, Israelis and citizens of other countries who live abroad and want to pay the property tax online.

You need to have the number and date of the declaration filed with the NRA. The declaration is completed a month after the Bulstat.

How to pay real estate tax in Bulgaria via the internet

We often encounter the question: how do I pay the real estate tax in Bulgaria from Russia, Ukraine, Kazakhstan, Israel, or Europe?

Electronic payment of taxes and fees has not been introduced in all 265 municipalities of Bulgaria. To check whether such a service is available, you need to obtain a PIC from the NRA, and check for the availability of the service on the website of the relevant municipality.

Banks that process payments: Municipal Bank AD, DSK Bank, First Investment Bank AD, Central Cooperative Bank AD, United Bulgarian Bank, Alpha Bank AD, Fast Pay HD AD, Eurobank Bulgaria AD, Transcard Financial Services. 

The list of municipalities’ IBAN accounts for the payment of local taxes and fees can be found at:
www.nap.bg/document?id=513,

Since each municipality has an agreement with a specific bank, when filling out the payment form you do not need to enter the IBAN — this data is filled in automatically.

Land tax in Bulgaria for foreigners 

The land tax and real estate tax in Bulgaria for foreigners and for citizens are the same for everyone. 

The municipal council determines by ordinance the rate of tax within the range of 0.1 to 4.5%  of the tax valuation of the real estate. The tax valuation of citizens’ property is determined by the city administration depending on the location and the area.

Tax on renting out real estate

In the Personal Income Tax Act (PITA), income from rent or another compensated provision for the use of rights or property is classified as a separate source of income for individuals (Article 10, paragraph 1, item 4 of the law). Income from renting out real estate must be declared in the annual tax return. According to the Personal Income Tax Act, homeowners can reduce their taxable income by 10% for expenses without being required to submit documents or evidence that the expenses were actually incurred.

Taxation of the income of individuals who rent out real estate to other individuals

1. Declaration
Landlords file an annual tax return (Form 2001) by 30 April of the year following the year in which the rental income was received.
In addition to the annual tax return, landlords who are individuals renting out real estate to other individuals must submit quarterly tax returns with advance tax (declaration form 4001). The deadline for filing the returns is the end of April — for the first quarter, the end of July — for the second and the end of October — for the third quarter of the year. For the fourth quarter no financial tax return is filed and no advance tax is paid.

2. Payment
Persons who rent out real estate to other persons must make advance payments against the rental income. The contributions are made quarterly and are transferred to the NRA account at the landlord’s permanent address. The amount of the contributions is determined by multiplying the amount of rental income received during the relevant quarter, reduced by 10% for expenses, by the tax rate of 10%. The deadline for advance payments on rental income is by the end of April — for the first quarter, by the end of July — for the second and by the end of October — for the third quarter of the year. No advance payments are levied for the fourth quarter.

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