Purchase tax on real estate is a crucial financial aspect that many young buyers often forget. Many also do not know that the exemption from paying purchase tax on the first property was abolished as far back as 2017.

Following are the answers to the most frequently asked questions from our clients:

Tax on the transfer of real estate

Purchase tax on real estate amounts to 3% of the market value of the property at the time of tax obligation, unless the property is in the VAT system.

Taxpayer obligated to pay

Purchase tax on real estate is owed to pay by the buyer, as the acquirer of ownership of the property. The tax obligation also applies to the purchase of the first property.

When does tax obligation arise

Tax obligation arises at the moment of signing the sales contract.

Declaration of tax on the transfer of real estate

After verifying the Sales Agreement for the property, the notary is obligated, in your name, to submit a copy of the Agreement to the Tax Authority.

If the buyer signed a contract of sale which was not verified by a public notary, he is still obligated to declare the transaction of the real estate to the competent authority of the Tax Authority, in the place where the property is located, within a period of 30 days.

Statutory basis

The Tax Authority shall determine the market value, as a rule, from the selling price specified in the Sales Agreement, if the selling price corresponds to the prices that can be achieved on the market.

If the Tax Authority has doubts about the amount in the Sales Agreement, they shall assess the property according to their own schedules or values and thus determine the new basis for paying tax.

Tax Resolution

The Tax Authority calculates the amount of tax and sends a preliminary tax resolution to the buyers at the address specified in the Sales Agreement.

If, after a subsequent examination, it is found that there is a basis for changing the tax obligation that was established by the preliminary tax resolution, the Tax Authority may issue a tax resolution that determines the difference in the tax obligation.

Deadline for paying tax on the transfer of real estate

The taxpayer must pay the determined amount of tax within 15 days from the date of delivery of the preliminary tax resolution establishing tax on the transfer of real estate. Any appeal does not delay the obligation to pay tax (neither the preliminary nor the final tax resolution).

Payment of tax in installments

The Tax Authority allows the payment of tax in 24 installments, with an interest rate of 7% per annum.

Recommendation to a credit intermediary

We recommend that before buying real estate, you consider all the costs of sale that include purchase tax on the transfer of real estate, agency fees, total cost of credit (effective interest rate), costs of a public notary, moving, potential costs of adapting and furnishing the property, and other possible costs.

The credit intermediary will help you to arrange the financial structure, if necessary, to start targeted saving to cover expected costs, and to prepare better for future financial obligations.

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