Tax Considerations on Selling Property

Tax Considerations in Bulgaria

Basically the tax rate in Bulgaria is 10% for individuals and same for corporations. Unless you are actually working in Bulgaria (legally), you are unlikely to have to pay any tax on a regular basis unless you sell property at a profit. Here is a quick overview of the tax situation when selling a property.

Much will depend on where you are deemed to be resident. If you are still resident in the UK for tax purposes then any profit could be taxed here in Bulgaria and subject to a with-holding tax, but you may still have to pay additional tax in the UK depending on what other income or capitals gains you have that year.

If you are resident in Bulgaria for tax purposes i.e. have a permanent address here in Bulgaria, spend over 183 days here in any 12 month period and if your centre of vital interests are here in Bulgaria.

Presuming you are resident in Bulgaria for tax purposes then the Bulgarian Individuals Income Tax Act states that personal incomes from the sale or exchange of real estate (apartment, land, buildings) is free of tax if you sell only:

a) one residential property, if between the date of acquisition and the date of the sale or exchange is more than three years;
b) two properties, as well as agricultural and forest properties regardless of their number, if between the date of acquisition and the date of the sale or exchange is more than 5 years;

Therefore if you are resident in Bulgaria for tax purposes and have owned the property for more than 3 years at the date of sale, then there should be no tax to pay, even if you make a profit.

To calculate if there is any profit on a sale, the (declared) purchase price is deducted from the (declared) sales price. If you have proper invoices for work done on the property you may be able to deduct these expenses as well.

Thanks to Aidos Accountants for the overview of the Tax Considerations in Bulgaria, specifically on selling a property here.

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