Taxes on selling property in Bulgaria

The issues of taxes when selling real estate in Bulgaria, the specifics of calculations and payments often cause difficulties for sellers of apartments, houses, and garages. In this article, Apart Estate experts will explain the most important points related to paying tax on income received from the sale of real estate, and will also explain in which cases the law provides for the possibility of not paying it.

Property sales tax

According to Bulgarian tax legislation, every seller is required to file a declaration of income received from the sale of their property. This must be done between January 10 and April 30 of the year following the year in which the sale was completed. The accrued tax must be paid within the same period.

Foreign citizens need to be careful. If a flat, studio apartment, house belongs to an individual, the declaration must be submitted within the deadlines indicated above on his behalf.

If the property is a plot registered in the name of a company, then the declaration is submitted on behalf of a legal entity and in accordance with the laws related to companies. It is better to consult with the accountant who runs the company about the specifics of taxation of income received by legal entities.

Not only the amount of money received is subject to taxation, but also any other remuneration, including the receipt of new real estate or a car.

Declaration forms are available on the Bulgarian tax authority website. You can submit it in several ways:

• At the tax office at the place of your permanent residence;
• At any post office;
• By sending a registered letter to the tax authority;
• Online, using a personal identification number or electronic signature. You can get it from the tax office.

If the seller pays taxes and contributions to the pension fund himself, the declaration can only be submitted online.

How is property sale tax calculated?

The tax on selling an apartment or other type of real estate in Bulgaria is 10%. When calculating it, you need to take into account several important points.

The amount payable is calculated based on the tax value of the property. In some cases, it may be less than the actual sale price. 

The accrual is made on the difference between the purchase and sale prices.

The third important point is that when calculating the tax, the amount of income taken into account is 10% less than the tax assessment value of the property.

For example, you own a beautiful one-bedroom apartment in Sunny Beach in a living complex with a swimming pool, purchased for 40 thousand euros. You sold it for 50 thousand euros. Net income, from a tax point of view, is 10 thousand euros. However, the tax must be calculated on an amount 10% (1 thousand euros) less. Thus, the tax calculation basis is 9,000 euros, and you will have to pay 900 euros.

You can reduce the amount of tax if you submit the declaration electronically before March 31 of the year following the year of sale of the apartment. In this case, you can count on a 5% discount. To obtain it, however, two more conditions must be met:

• The amount should not exceed 500 BGN;
• You should not have current debts to the tax office or unpaid fines.

When property sales taxes do not need to be paid

The good news is that although you will have to file a tax declaration when selling real estate, you don't always have to pay tax.

Here are a few cases where it is not necessary to plan for these expenses:

• If the sale price of the property is less than the price at which you bought it. There is logic in this, because, from a tax point of view, you receive negative income and lose money.
• If you sold residential property that you have owned for more than 3 years. This must be real estate, the documents for which clearly state that it is used for residential purposes.
• If you are selling no more than two properties that you have owned for more than 5 years. In this case, not only apartments, houses, townhouses intended for living, but also studio apartments, land, and garages are exempt from tax. It is worth noting here that you can sell any number of agricultural or forest plots and not pay tax. The main thing is that they have been owned for more than 5 years.
• Tax is not charged on the sale of real estate of any type received as an inheritance. Here it is important to indicate that we are talking specifically about an inherited apartment, house or plot. When selling real estate received as a gift, tax is assessed and payable.

If you are planning to sell property in Bulgaria in St. Vlas, Sunny Beach, Elenite, Nessebar, Pomorie or Burgas, but worry about how to do everything right, contact the Apart Estate agency. We will help you find solvent buyers, correctly prepare all documents for the sale and complete all administrative issues.