Notary Act Information
The Bulgarian property system uses Notaries and a Notary Act in order to transfer the ownership of buildings and/or land.
Prior to signing the Notary Act, the local municipal council conducts a tax evaluation of each property 'tax estimation price', and this valuation represents the minimum value which must be reflected on the Notary Act. The ‘tax estimation price’ is for the purposes of real estate taxation and is much lower than the actual selling (purchase) price. In general the tax evaluation rate ranges from 25-50% of the full market value.
Most Bulgarian property owners (vendors) wish that the ‘tax estimation price’ is written in the title deed, and not the selling (asking) price which the buyers are paying, so due to this practice there might be discrepancies between the price you are paying and the price written in the title deed.
When an individual comes to sell a property in Bulgaria the same system works with a tax evaluation prior to the Notary Act.
In general, if a buyer wants to reflect a value higher than the tax evaluation on the Notary Act, extra costs incurred as a result of this action are paid by the buyer. With particular reference to ‘off plan purchases’, extra costs will include extra notary fees, municipality taxes and VAT.
* It is important to note that the tax evaluation is set by the local municipality and Jood Investments Ltd accepts no liability for the content of the tax evaluation.
Bulgarian Mortgages
Jood Investments Ltd have teamed up with an independent financial advisory company Conti Financial Services who are able to recommend mortgage lenders who will be able to advise as to whether it is viable for you to make an application for a mortgage in Bulgaria.
Points you should consider are:
Mortgages are available for off-plan properties only once they reach roof level stage of construction.
Mortgage companies will lend up to 70% of the property value
Interest rates are usually between 6.5% and 7.5%
Mortgages terms available are up to 20 years only
UK Mortgages
There are currently only a few mortgage lenders that will assist with financing property in Bulgaria. You will need to speak to a mortgage advisor to ascertain if you are eligible for a mortgage. We would recommend that you speak to someone at Conti Financial Services. A cheaper option may be to look to raise the capital in the UK instead. Most people do this by releasing equity on their own property. Again, we would strongly recommend that you take legal advice on matters of this nature.
Conveyancing & Legalities
According to Bulgarian law, persons such as companies cannot acquire the ownership of land in the country. However, they are permitted to acquire the ownership of houses or flats and limited ownership rights with regard to every kind of immovable property situated in Bulgaria. Under the category of ‘limited ownership’ Bulgarian law includes the rights of use (uses), the right to build a house on a piece of land (superficies) and the servitudes (e.g. the right of access to the street through another person's piece of land).
Loosely interpreted foreigners can buy buildings, the right to build and other land related rights such as the right of use and passage but cannot buy the land (until the year 2014, when this rule will change). You will have the right to use the land (in proportion to your ownership of the building on which it stands) so the lack of outright ownership of the land is a fairly academic point.
Non Bulgarians can even now acquire land by setting up a Bulgarian registered company. If you are thinking of buying a number of apartments this might be worth considering, as the taxation in Bulgaria may well be more favourable than at home but you should take professional advice before making any decision.
Brief Information On Forming A Company
Private Limited Company (a limited liability company) is a commercial company with share capital owned by its members whose liability is limited to the amount of the capital subscribed. A private limited liability company may be founded by one or more persons, including foreign natural or legal persons. The minimum foundation capital is Lev 5,000 (approx £1800) divided into shares with nominal value of Lev 10 each and at least 70% of the capital must be paid up on foundation. Contributions to the foundation capital may be paid in cash or in kind. The statutory bodies of the private limited companies are the general meeting of shareholders, which must be held at least once a year, and the managing director or board of directors.
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