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I bought in 2016 for 115000 euros (100000 declared at notary that I was aware of ) via a Company - as was required for foreign buyers purchasing property with land.

I am now in the process of selling for around the same 100000 euros mark. Never received any VAT back at anytime.

does anyone know what tax I will need to pay? There will be no profit but I’m not sure if there are different rules for Companies (which I know I will have to pay to liquidise).

@cherylcollier400

None

I bought in 2016 for 115000 euros (100000 declared at notary that I was aware of ) via a Company - as was required for foreign buyers purchasing property with land.
I am now in the process of selling for around the same 100000 euros mark. Never received any VAT back at anytime.
does anyone know what tax I will need to pay? There will be no profit but I’m not sure if there are different rules for Companies (which I know I will have to pay to liquidise).
-@cherylcollier400

if there has been no gain - and your paperwork reflects that ie correct prices declared - there should be no tax to pay in that respect. Other taxes and fees will depend on your lawyer/agent/notary. What area is your property in?

Hi Guys,

I'm sorry to drag up this old thread, but after a conversation last night with someone I may be buying a property from, I need some advice.

This is a private purchase, no agent involved. The property was bought by the current owners about 14 years ago, for 50k euros. Its currently advertised for £39500, which at today's rate is around 46k euros.

When they bought the house it was fully furnished and the seller asked them for 15k euros in cash and the price of the house at 35k euros.

They were informed that this was common practice in Bulgaria and the seller told them that the 15k euros  was for the furniture.

In the conversation last night they asked if I would do the same, to save them paying too much tax.

I'm not entirely happy about this, but I wanted to clarify something. I may be wrong, but surely when you sell a house, you only pay tax on profit.

The house being down valued to 35k euros when they purchased and sold at 46k euros, will officially give them a profit of 9k euros, so I'm assuming a tax bill for 900 euros.

They have done some work on the property, so I would expect that if they have receipts, they could use those to offset the tax, as that reduces their profit.

Am I correct in this assumption, or am I completely off the mark?

As far as Im aware, the tax of 10% is only paid on any profit they make. If they sell at a loss there is no tax to pay.

From what Elaine says, the house is being sold now for 46k but is shown as being bought for 35k (+ an extra 15k for furniture that wasn't mentioned on the official documents). So that would show a 9k profit, presumably less whatever they've spent improving the property.

I don't see anything dishonest with the sellers doing the same thing and dividing what you pay between the actual property price that's declared at the notary and a separate agreed price for the furnishings. It also means you won't be paying higher council tax because of the furniture, dog beds, etc. It's not unusual to see houses advertised with two prices, one without furniture and fittings and one with them.

According to other comments further up the thread, if they have resident status and it's been their main home for 5 years, there shouldn't be any tax on profits, anyway. I don't know this for sure or whether that was someone muddling up UK law, where that is the case, with Bg law where possibly it isn't.

@janemulberry

Hi Jane  that's interesting point about the 5 years.

Can anyone confirm if that's correct?

Also regarding proof of improvements, do they have to be carried put by a tradesman, or can you claim for materials, if you do the work yourself?

I don't know, but I think if they have evidence of money spent it should count against profits. I'm not planning to sell my house but I'm saving all the receipts just in case. Harder to prove the labour costs though as they've all been paid in cash.

A quick Google suggests that if they have Bulgarian residence and have lived in the house as their primary home for 3 years and are moving to a different home in the EU, they should be tax exempt. Though it's a little confusing, as if they return to the UK they might have to pay the CGT on it in the UK instead.

From a Bulgarian law firm's site:

Capital Gains Tax

The rate of tax on capital gains in Bulgaria is a flat rate of 10 percent. Capital gains are usually taxed as income; however the following assets are exempt:

Any one residential property per year, regardless of when acquired if used as the main home or not, if owned for more than 3 years.

Two properties which have not been the taxpayer’s main residence, if owned for more than five years.

Any number of agricultural and forest estates provided they have been owned for at least five years.

Cars and other road vehicles, aircrafts and vessels owned for at least one year.

Assets received by gift.

Certain types of movable property, including shares in a Bulgarian quoted company.

Foreigner residents of Bulgaria

For a foreigner resident disposing of property there may be no tax liability in Bulgaria, but their capital gains tax will be due on the gain (calculated under their country of residence rules).

In Bulgaria, it is not uncommon for the lower valuation of the property used to calculate the local taxes to be put on the title deeds. This is often significantly lower than the purchase price and means that any eventual gain for worldwide purposes will be higher because a lower price was used on this title deed. Thus, individuals often end up paying tax they don’t need to pay.

@janemulberry

That's really helpful. Thank you 🙂

@janemulberry

That's quite correct.  I sold 2 properties a couple of years ago, at a decent profit, and paid no tax on the deals.

It's daft to lie about property prices when buying or selling, and trying to fiddle tax is a very poor way to start a new life in another country.  It can cut both ways though: about 10 years back I bought an apartment at a seriously good price; the real price was written into the notary deed, but I still ended up paying more tax than was actually due because the "correct" market price was used to calculate it, regardless of how much I in fact paid for it.  I didn't complain too much!