Why Bulgaria?

For many people Bulgaria has been seen as a place to buy cheap property - to snap up a rural farmhouse for 10,000, a site with a Sea view for 25,000-30,000 or a beachfront studio apartment for 40,000-50,000.
Only on going to have a look at their investment for themselves have these investors found out that Bulgaria’s pretty attractive too, especially its Black Sea coast and mountain regions. Bulgaria is often compared to Spain in terms of tourism and property development.

Popular locations

Bulgaria, if the large Ireland’s tour operators are to be believed, has taken off in a big way, particularly the Black Sea resorts of Varna, Bourgas and Sunny Beach. Tourist numbers from the UK and Ireland doubled in 2005. Those who prefer their holidays a little cooler will want to head to the ski resorts of Borovets and Bansko in the Pirin Mountains, an hour or so from Sofia. The ski runs are of good intermediate level standard, and the mountain scenery even better, in what is a World Nature Heritage national park. Borovets, near to the Rila Monastery, in particular, has character aplenty.
Sofia
Sofia is the country’s largest city and home to its major museums, administration and government. The most Westernised of Bulgaria’s cities, with the exception of the tourist resorts, Sofia has only recently become a focus of significant foreign investor interest.
New developments in Sofia are selling for less than 1,000 euro (£700) per m2. After Bulgaria joined the EU, prices are expected to increase to 2,000–3,000 euro (£1,400–£2,100) per m2 over a two year period. Currently, a one bedroom, 87m2 apartment, situated five minutes from the city centre by car, costs around 75,000-80,000 euro.
Southwest mountain region
Bansko, located at the foot of the Pirin Mountains and its national park, attracts visitors thanks both to its ski slopes and to its cultural monuments, museums and murals. This is the region of choice for those who prefer the real Bulgaria – yes, some people claim that much of the country is already being spoilt by rich Westerners! Check out Borovets, the oldest and largest ski resort in Bulgaria. Property for sale in Bansko includes new build ski apartments, priced from 45,000 for a one bedroom apartment sold off plan.
Black Sea coast
The site of a construction boom unprecedented in Bulgaria’s history, the Black Sea coast is a stunningly naturally beautiful region. Sandy beaches line the shores of the warm sea against a backdrop of new apartment blocks, particularly at the modern Sunny Beach resort. The characterful old towns of Varna and Bourgas still offer a cultural diversion.
The high level of supply ensures prices remain cheap by Irish standards – 50,000 euro will buy you something new locally, if not frontline to the beach. But be quick, as no more beachfront development will be permitted.
Golf Resorts
Golfing is a major attraction for tourists and investors all over the world. Many experts predict Bulgaria will overtake the likes of Spain and Portugal as Europe’s premier golf destination.
With three PGA courses currently under construction and a further 20 courses planned within the next 10 years, it’s not difficult to understand why golfers are heading in numbers to Bulgaria..
The three PGA courses in the Kavarna area are designed by Gary Player and Ian Woosnam. Two of them are currently under construction.

Buying a property

The purchase process
Bulgaria’s system of property purchase, though relatively straightforward, is different from Ireland. To begin with, it is quite common for both buyer and seller to pay the estate agent for his work in bringing them together. His fee may be as much as 6 per cent of the purchase price, split 3 per cent each between the two parties. Often, this practice will only be enforced when buying an older property and not a new build, when, in all likelihood, you will be negotiating with, and buying from an Ireland or UK agent and/or developer.
Another significant difference, when buying a house with land rather than an apartment, is that non nationals are not permitted to own land. Therefore, it is necessary to form a limited company in Bulgaria and register yourself as a company director. Forming a limited company is straightforward, taking around four weeks and costing 500-600 euros. The regulations are likely to change in the near future, as one of the EU’s tenets is that property and land ownership must be open to all.
Thereafter, the buyer’s solicitor will draw up a preliminary contract of sale, at which
stage the buyer will be expected to lodge a 10 per cent deposit. The solicitor will then check the property’s title, and, assuming everything is in order, the purchase price balance, land tax and notary fees, in total amounting to approximately 5 per cent of the purchase price, will fall due for payment. The title deed will then be processed, and in due course the new owner will receive his papers of legal ownership.
Costs
Several fees and taxes are payable when buying property. Budget to pay 4–5 per cent of the purchase price. Solicitor’s fee is around 1% of the property price, between 3 and 4% are legal costs- notary fee, municipality fee and property tax.
Mortgages
Rates currently stand at 6-7% with 70% property value and 30% deposit. Contac us for more information on mortgages for foreign property buyers in Bulgaria.

Taxation

The annual income tax return is due by 15 of April each year, and tax owed must be paid within 30 days of its submission.
Personal taxation: non residents
Ireland has a double taxation agreement with Bulgaria. Under Bulgarian tax regulations, a foreign national who is resident in a state with which Bulgaria has signed such an agreement, and who has earnings in Bulgaria, is subject to taxation in Bulgaria. After the tax has been paid, the foreign national may apply for a refund of the difference between the amount paid and the amount due under the relevant double taxation agreement. Tax is currently levied at 15 per cent, after deduction of allowable expenses. Capital gains tax (also at 15 per cent) may apply in certain circumstances, for instance if a property is sold at a profit.
Personal taxation: residents
For tax purposes, a foreign national staying in Bulgaria for more than 183 days during a calendar year (1 January to 31 December) is considered a resident. The 183 days need not be consecutive.
Bulgarian residents are taxed on the total amount of worldwide income they receive during the calendar year. There are no personal allowances for spouses and dependants.
As at 2006, income of less than 2,160 leva (approximately 1200 euro) is not taxed. Income of 2,161–7,200 leva (approximately 1200-3500 euro) is taxed at banded rates, the highest being 22 per cent. On income above 7,201 leva (approximately 4000 euro), 24 per cent is payable. In the appropriate circumstances, residents may be liable for capital gains tax. There is no wealth tax in Bulgaria, and inheritance tax was abolished in 2005.
Local taxes
Annual property taxes are low - in the region of 0.15 per cent of the declared value of the property (i.e. 7.50 euro on a property valued at 50,000 euro). The figure may vary, depending on the region and level of services provided. Should the property be in a residential complex (for example, an apartment block), an owner can expect to pay a contribution to the Housing Association of approximately 300 euro per year, which provides for 24hour security, cleaning, swimming pool maintenance, lighting and gardening.

Useful links

www.imot.bg is the country’s biggest property search directory with various estate agents, builders, developers, as well as private sellers posting their properties for sale on the web.
www.government.bg is the Bulgarian Government web site where you can find useful and necessary information prior to your trip to Bulgaria.
And finally...
Bulgaria offers great opportunities for investors looking to buy a property abroad for personal use or investment. It’s wholly possible to buy a studio apartment for around 40,000–50,000 euro on the Black Sea coast or in a ski resort, or a site in the same area for around 25,000-30,000 but be sure to adjust your expectations to accommodate a country whose infrastructure and communications (including roads, telephones and so on) are not so advanced, although they are modernising rapidly.