Innovative property investments
Investment Property in Croatia
Buying Guide
Buying Process
Keep the paperwork in order
Paperwork is another thing to make sure is in order before any contracts are signed.
Don't agree to buy anything that does not have the appropriate documentation as this will cause no end of problems when the time comes to sell the property on.
The same rule applies to property whose value is under-declared on official paperwork.
Walk away from any vendor who insists on part-payment in cash to make up the difference from the declared to the true value: it will be you who has to bear the burden of this when it comes time to sell on.
Contract stages
Once the sale has been agreed, there are usually three contract stages to complete the purchase.
The reservation contract takes the property off the market; the preliminary contract allows the buyer to apply for permission to buy (if needed) in return for a 10% deposit.
The final contract is exchanged when full payment is made and the deeds are registered with the Land Registry.
Purchasing costs
Purchase fees involved in buying property in Croatia amount to around 7 - 8% of the property cost, spread across the estate agent and notary fees, translators, registration of documents and a property transfer tax currently set at 5%.
On top of this, VAT at a rate of 22% is payable on all new-build property and on resale property under certain circumstances.
Again, this will be made clear by the legal representatives at the contract stage when payments and fees are set out.
It is worth noting for when you come to sell your Croatian property that estate agency fees are split between the buyer and the vendor.
Taxes
Non-residents in Croatia pay income tax levied at 20% on all income earned in the country, as well as an annual property tax of around 0.90 GBP per square metre of floor space.
Should you choose to become officially resident in Croatia, you are liable for tax on your worldwide income.
Rental income tax is charged at 15% at present, and a double-taxation treaty is in existence with the UK tax authorities.
The advice of an international taxation specialist should save you from paying more than your liability.
When considering buying a property in Croatia be mindful of the fact that Capital Gains Tax of 35% is payable on the profits made on property sold within three years of the original purchase.
After three years, no Capital Gains Tax is payable.
Key facts
- Don't buy anything that does not have the appropriate documentation
- Walk away from a property whose value is under-declared on official paperwork; it will be you who has to bear the burden when you sell on
- Buying involves three contract stages: reservation, preliminary and final
- Purchase fees are 7 - 8% of the property cost and cover estate agent, notary and translator fees; registration of documents and a property transfer tax currently set at 5%
- VAT is charged at a rate of 22% on all new-build and some resale properties
- Non-residents pay 20% income tax on all income earned in the country plus an annual property tax of around 0.90 GBP per square metre of floor space
- Residents are liable for tax on their worldwide income
- Tax on rental income is charged at only 15%
- A double-taxation treaty exists with the UK tax authorities
- When you sell on, remember that the estate agency fees are split between the buyer and the vendor
- Capital Gains Tax of 35% is payable on the profits made on property sold within three years of purchase but none payable after three years’ ownership
Downloadable Reports and Documents
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