Buying property in Bulgaria as a foreigner is not as straightforward as it is in some other markets. Non-Bulgarians cannot own land in the country directly; according to the Bulgarian Constitution and Legislation foreign persons currently are prohibited from owning land and can acquire only buildings but not land on which the buildings are built. This means that for almost all purchases a buyer must first set up a limited liability company in whose name the purchase may be made.
This process is actually less complicated than it sounds; companies can be set up and registered at a total cost of € 600 (including registration with the National Tax Registry, the Companies Register, the Social Security Institute and the lawyer’s fee). The preferred form for business is Limited Liability Company /OOD/. In this case the capital is shared by company’s members whose liability is limited to the amount of the capital subscribed. The owner of the company is required to set up a bank account (for a nominal fee) and place a deposit (the minimum foundation capital) of approximately € 2600, refundable once the company becomes a legal entity. The process of incorporating a company takes about a week or two to be completed.
A Ltd Company can own more than one property, so investors who aim multiple purchases will be relieved to learn that the process only needs to be endured once.
During the time of establishing the company a preliminary contract for purchasing a property can be signed if the buyer has already chosen it. Buyers of overseas properties are often advised to hire a local lawyer who speaks the language to make the full check ups of the property. When signing the preliminary contract the deposit payable is usually 10 % of the price but could be less or more depending on the negotiations with the seller. The solicitor will check the title documents, building permissions, debts on title, will make sure that the vendor is the legal owner of the property and has the right to sell and prepare the preliminary contract. The solicitors charge approx. € 300 for that service.
After everything was checked by the lawyer and once satisfied with the result the buyer can finalize the deal by paying the balance of the purchase price, along with a combined land tax and notary fee. In Bulgaria, all property transactions are concluded in the presence of local government officials called Notaries. They use a standardized contract in which they incorporate the details of seller, buyer and the property. They are also responsible for calculating the value of the property for tax purposes and ensuring that the relevant taxes have been paid before title can pass. The sum for taxes is dependant on the declared value of the property. The value can – and often does – differ from the purchase price and can be a lot less than the price given on the contract. So, the taxes vary between 3 and 4% of the evaluation price.
Last but not less important for you to know is that we need your presence here at the beginning. After you sign the documents for the company formation you can also sign a power of attorney to one of us or to a lawyer to do all the necessary actions afterwards in order to purchase the property on your behalf. This way it will not be mandatory to come again in Bulgaria to finalize the deal.
As a summery we can point the steps as follows:
- Visit www.excelproperty.biz and browse. Send an enquiry. An agent will contact you.
- When you are completely satisfied with the information provided and have already chosen few properties book a viewing trip.
- After deciding which property to buy, if the property comes with a piece of land, Excel Property will start the procedure of forming a company for you.
- Pay a deposit to secure your new home.
- Detailed checks on the property.
- Final payment for the property in front of a Notary.
- You or your company is the owner of the property.
From this point on it is your duty to have wonderful time in your new dream home.