New here and trying to get an answer ??

[little lady]

Hello, I have bought an apartment in nessebar (off plan) It is now finished and furnished and ready to go. I have yet to sign the notary deeds, in fact about 6 owners are in the same position. The developer says we must put the value of the apts to that of double of what we actually paid for them on the deeds. I have heard of the value being put as lower but never higher. This means the Vat will be more, also it looks like we have to pay our own VAT as he now says he has no money to pay. Can someone spread some light on this situation. Thanks in advance...

 

[Lysos]

Surely, your lawyer should be dealing with this ?.

 

[Manzanares]

Hello, I have bought an apartment in nessebar (off plan) It is now finished and furnished and ready to go. I have yet to sign the notary deeds, in fact about 6 owners are in the same position. The developer says we must put the value of the apts to that of double of what we actually paid for them on the deeds. I have heard of the value being put as lower but never higher. This means the Vat will be more, also it looks like we have to pay our own VAT as he now says he has no money to pay. Can someone spread some light on this situation. Thanks in advance...

Hi

As Lysos said in his response your Lawyer should be sorting this for you - I am presuming you used a Lawyer at some stage during the process ? If not, then I would strongly recommend you speak to one asap. With reference to the VAT - all properties in Bulgaria have VAT to be paid on the price, but most developers would take that into account and it would be reflected in the selling price of the unit at the time it was marketed - but some did not include VAT in the selling price and it would need to be taken into account when calculating the final "cost" of the unit. But again your Property Contract should detail this which I am assuming you have a copy of ?

It is difficult to be specific without having seen your contract or any other documents you have signed - but please before you take any further action or pay any more money - speak to a Lawyer.

Regards

 

[CCKB Ltd Properties]

I strongly recommend you get an independant lawyer, not one that has anything to do with the development to check out all of this. Do not sign anything until you have done this.

 

[PropertiesOverseas]

Yes as an agent this does sound very odd and I have heard nothing like this before. Yes they do under-declare but over-declaring sounds crazy.

I suggest you get legal advise.

Regards

 

[hyip41]

You need a lawyer

 

[Resale Help]

Hello, I have bought an apartment in nessebar (off plan) It is now finished and furnished and ready to go. I have yet to sign the notary deeds, in fact about 6 owners are in the same position. The developer says we must put the value of the apts to that of double of what we actually paid for them on the deeds. I have heard of the value being put as lower but never higher. This means the Vat will be more, also it looks like we have to pay our own VAT as he now says he has no money to pay. Can someone spread some light on this situation. Thanks in advance...

Hi there.

Under Bulgarian law if the preliminary contract you signed states the price with no mention of VAT, then the VAT is included in the price and it is not your responsibility to pay it. It also means that you have a legal document which clearly states the real price and it is unheard of for any party involved to want to declare a higher price and pay more VAT than is actually necessary.
I would consult your legal representative about this immediately. Stel

 

[Raresaturn]

Strange, get your lawyer to sort it out.

 

[BPAG]

When it came time to sign my notary deeds I was told I had the option of putting the government value of the apartment or the price that I paid on the notary deed.

The government value was lower than the price I paid, I put the price that I paid on the notary deed and
the developer paid the tax. (bought directly from the developer) You should only have to pay VAT if the preliminary contract states plus VAT.

If you sell you have to pay tax on any profit you make so it makes sense to declare the higher amount on the notary deed.
These tax regulations have been changed and tax on any profit that you make on the sale of property is now only applicable if you sell more than one property a year.

 

[Jain and Chris]

Agreed, get a lawyer. It is extremely odd that the developer would want to put a higher value on the deeds than being paid. As said, it is usually the other way around. Nonetheless, only ever put on your deeds the real price you are paying.

I know this is slightly off topic but just to clarify on the tax (capital gains tax) you pay on profit when selling a Bulgarian property. The law of being able to sell your own Bulgarian home without paying profit tax applies to Bulgarian residents.

If you own the property via a company vehicle, then you will pay profit tax (corporation tax) on any profit you make on resale (currently at a flat 10% in Bulgaria),less any deductible invoices for repairs, improvements, etc.

If you own the property as an individual but are resident in another country, then the tax rules of where you are resident will apply to the tax on the profit you make (the flat rate of capital gains in the UK for 2008/2009 and 2009/2010 is 18%),subject to any taper relief or tax free allowances (currently 9,600 pounds in the UK, increasing to 10,100 in 2009/2010 for each individual) which may be available.

All the best

 

[BPAG]

just to clarify on the tax (capital gains tax) you pay on profit when selling a Bulgarian property. The law of being able to sell your own Bulgarian home without paying profit tax applies to Bulgarian residents.

If you own the property via a company vehicle, then you will pay profit tax (corporation tax) on any profit you make on resale (currently at a flat 10% in Bulgaria),less any deductible invoices for repairs, improvements, etc.

If you own the property as an individual but are resident in another country, then the tax rules of where you are resident will apply to the tax on the profit you make (the flat rate of capital gains in the UK for 2008/2009 and 2009/2010 is 18%),subject to any taper relief or tax free allowances (currently 9,600 pounds in the UK, increasing to 10,100 in 2009/2010 for each individual) which may be available.

All the best

So my developer and notary have advised me incorrectly? They told me that there is a new law that states that capital gains tax is payable only if you sell more than one property a year.

I would guess that this is based on the assumption that one property a year could be your holiday home and any more than this would be a business.

 

[Silhana]

some legal help

Dear little_lady,
According to our obligation law, the price of the apartment is what’s written in the preliminary contract. You should check is the price VAT included or VAT excluded. On the notary deed must be written the same price as this in the preliminary contract. Of course some developers wants low price to be written in the notary deed, because of saving VAT and cost. This is sometimes good, buts sometime risky. If something happen and for some reasons you are removed from the apartment by court decision you could claim the developer only for the price, which is written in the notary deed. My advice is to contact your lawyer immediately! He or She will solve this situation.
Other thing that you have to know, after buying the apartment on notary deed, you have to register immediately yourself, as a foreigner owning apartment in Bulgaria, in the BULSTAT register. The other thing is that you have to register your apartment in tax authority within 2 months.
If you have any questions, don’t hesitate to contact me at my e-mail [email protected]

Good luck!

 

[Jain and Chris]

So my developer and notary have advised me incorrectly? They told me that there is a new law that states that capital gains tax is payable only if you sell more than one property a year.

I would guess that this is based on the assumption that one property a year could be your holiday home and any more than this would be a business.

Your accountant should have advised you based on your personal circumstances and also this change in Bulgarian legislation is not so new at all now.

Perhaps you are fiscally resident in Bulgaria and own a property in your own individual name? In this case, the notarial advice would be correct, you will not pay capital gains tax / profit tax if you sell the one main property during any tax year.

None of the Bulgarian laws on profit tax is based on the assumption that "one property a year could be your holiday home". I'm not sure what you mean by this? A holiday home would be taxed at your place of residence outside the country anyway.

I only wanted to add a comment as I believe it is deceptive to sweepingly make statements to the effect that if you "sell one Bulgarian property a year, you don't pay tax on any profits you make".

1. If you are resident in Bulgaria and own your Bulgarian property as an individual, then if you sell your one main property there is no capital gains /profit tax payable.

2. If you are a Bulgarian property owner via a Bulgarian company vehicle, there is profit tax (corporation tax) due at 10%, which is normal company tax on all profits.

3. If you are an individual Bulgarian property owner but are resident overseas, then capital gains / profit tax is payable in the country of your residence at the rate applicable in your home country (as said, 18% in the UK but will differ from country to country).

2 and 3 above are subject to allowable deductible invoices, taper relief and personal tax allowances in whichever country's tax law applies.


Paying profit tax / capital gains / corporation tax.... all depends upon your personal circumstances - how you bought the property, as an individual or through a company - and potentially where you are resident for tax purposes.

It is imperative that people do not take general statements regarding legal or financial advice but employ the services of an independent professional who can assist them based on their own personal circumstances.

Best wishes

 

[BPAG]

It is imperative that people do not take general statements regarding legal or financial advice but employ the services of an independent professional who can assist them based on their own personal circumstances.

Best wishes

Yes totally agree with you.
We all want simple answers but in reality there are hardly ever any.

Seems that the notary over simplified the situation in my case also as I am living in Bulgaria but paying tax in the UK.

 

[Jain and Chris]

Yes, that could well be true. Notaires are not solicitors or lawyers as we know then elsewhere. They are government functionaries and only interested in witnessing signatures and collecting taxes on the state's behalf.

Don't rely on developers, agents or notarial advice, they will not provide independent advice regarding taxation - get your own independent lawyer

Best wishes

 

[Nick_buyer]

Hi All,

You should definetelly use a lawyer. I recommend you BulgariaRealEstateLaw.com - Bulgaria Real Estate Law, Corporate and Commercial Law, Litigation. They are an independent law office. I used their services.