There
is a growing interest in investing in property in Croatia. Popular
areas for foreigners are 1. Istria,
in the North West, frequently touted as the new Tuscany, which has,
at various times, been part of Italy. Its proximity to Trieste with
Ryanair flights and its location as the nearest point to the sea
for much of central Europe, has guaranteed a steady rise in prices,
with plenty of room for appreciation yet. There is coastal and inland
property for sale as well as hotels. There are also consortia being
formed to build golf courses. 2. The various islands, from Cres,
Krk and Pag, through Vis, Brac and Hvar, down to Korcula and Mljet,
many still cheap. 3. The central Dalmatian coast, with Zadar frequently
tipped as another Ryanair destination and 4. The southern coast,
around Dubrovnik,
where prices are already high.
Foreign
nationals are able to purchase and sell a property in Croatia but
it is conditional upon consent being granted by the Ministry of
legal affairs and the Ministry of foreign affairs. These statements
on consent are issued to citizens of those countries Croatia signed
a contract on reciprocity with and in extraordinary cases, to citizens
of other countries. Most EU countries have this agreement with Croatia.
The procedure for obtaining the statement on consent is as follows:
When a foreign citizen decides to purchase real estate in Croatia,
a sales contract is signed with the selling party. This contract,
together with other relevant documents are sent to the Ministry
of foreign affairs in Zagreb. When the Ministry issues to the customer
its statement on consent, the foreign citizen is entitled to register
the real estate onto his name at the Municipal court -Cadastry department.
This consent from the Ministry normally takes between 6 months to
2 years to obtain. In the mean time, the sale goes ahead and the
new owner is provisionally written into the Cadastry department
registry with the stipulation that consent is being sought from
the Foreign Ministry.
The new owner is also covered in the contract that in the event
that consent is not granted, the applicant may choose to file another
application in another name OR has right to rental for 99 years
OR may sell the property on.
The responsibilities have now moved from the Foreign Ministry to
the Ministry of justice.
There is a one-off purchase tax of 5% on all types of property.
The tax charged is based on the price of the property in the sales
contract. As a rule this tax is paid by the purchaser. It is paid
after conclusion of the sales contract when the customer is obliged
to register the purchase at the authorized tax authority within
30 days from the day of conclusion of the contract. Public notaries
do also submit one copy of the sales contract to the tax authorities.
The customer is obliged to pay respective real estate purchase tax
within 15 days from the day of reception of the decision received
from the tax authorities on the exact tax amount. If this tax is
not paid within this term, interest on arrears are charged for every
day of delayed payment.
A seller will only pay taxes on the sale when the property is sold
within a three year period and also if sold at a higher price than
originally purchased. In such a case the seller must pay a 35% income
tax on the difference in value of the property (purchase and sales
price).
The purchase procedure for buying a home in Croatia
As a first step, it is best to secure the property with a minimum
deposit equal to 10% of the purchase price. This is the minimum
deposit required for it to be legally recognised as a deposit. The
deposit is usually paid at the signing of a pre-sales contract where
it is usually stipulated what and when further instalments will
be paid. When the last instalment is paid a sales contract is signed
at a notary or in the presence of a lawyer whereupon keys are handed
over to the buyer.
The
costs to buy a property in Croatia
You
will have to pay 2% notary fees and between 1% - 3% agency fees.
Few agents charge 4%.
Ongoing
costs once you have bought a property in Croatia may include;
Non-Resident’s tax calculated per square metre of the
housing space annually
Ground tax calculated per square metre paid annually
Garbage costs, an annual payment
Insurance, electricity and water
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