Things You Should Know Before You Buy a Property in Croatia

Šime Unić
Things You Should Know Before You Buy a Property in Croatia

Buying real estate in Croatia is rewarding on many levels, but in most cases, it’s not quite simple. Here are the five things you should know before considering purchasing property in Croatia.Paperwork can be nasty – Obtaining all the necessary permits to buy property in Croatia can last up to a few months in some cases. In some straightforward situations the process will only take a couple of days, but it can take longer if some extra permissions or documents are required. This happens, for instance, when a property is considered part of a town’s heritage (somewhat similar to having a listed status) – there’s more paperwork involved if you’re trying to buy a cultural property.

Differences between agricultural and non-agricultural property – Foreigners cannot buy agricultural land until 2020, although it can be bought through a company (which has to be registered in Croatia). But plans have already been set into motion to lift the ban earlier than 2020, and it’s expected that it will be abolished on the 1st of July 2016.Residents of the EU who wish to buy non-agricultural land must have a document confirming that the land is in the area suitable for development. We strongly suggest you hire a licensed real estate agent to navigate you through the paperwork: be sure to know that can you build on the land you’re buying, and see the territorial plan as well. It’s common that all the documents for the client are handled by the real estate agent – although you can bring a lawyer on board as well. The final contract is to be verified by a public notary.Energy efficiency law – There is also an energy efficiency law stating all houses and apartments must have an energy performance certificate before a purchase contract is drawn and signed; certificates are given by specialized assessors.Fees and costs – Agent fees are usually around 2 per cent, notaries usually cost around 50 euros, plus another 40 for stamps required for registering ownership. Legal services, people who draw up the contract, are usually paid one percent the value of the property. Some realtors will include that in their commission, some you’ll need to pay extra. Bear in mind that the five per cent property tax can be calculated on only a part of the price; which most often happens in cases of buying directly from a ltd company investor. This is because the VAT is already included in the price, and double taxation is illegal. If you’re buying from an individual owner, it will always be the 5 per cent of the total amount (VAT can’t be added).Property tax will be calculated on the entire amount (and there’s no double taxation). If one of the parties tries to persuade you to pay a lower price in the contract, and then pay the difference between that number and the actual sale price in cash, don’t do it. This practice is illegal and will cause you many problems: the tax office will force you to pay on the estimated property value if they reach the conclusion that the price set in the contract is in fact significantly lower than the market value.

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