What do foreigners need to know about buying their first property in Croatia?

Šime Unić
What do foreigners need to know about buying their first property in Croatia?

Croatia is a very popular and safe place to live, which is why many foreigners decide to buy real estate in this area. But if you are not well informed, the buying and selling process can turn into a real mess.

Buying real estate is a great way for foreigners to ensure a longer stay in Croatia. Many decide to spend their retirement in one of the many beautiful cities on the coast and inland. Therefore, foreigners are allowed to buy real estate, but everything depends on their nationality, because the current purchase law is based on agreements on the principle of reciprocity between Croatia and other countries.

Before we explain the purchase process in more detail and emphasize the basic legal aspects in the Republic of Croatia, it is important to note that you should always hire a lawyer or other legal person to guide you through the entire process, regardless of whether you are a foreigner or a Croatian citizen. Buying real estate is a very serious matter, and an experienced and professional real estate agent will make sure that everything goes smoothly.

Foreign citizens who decide to buy real estate in Croatia can be divided into two groups:

1. Foreigners from the European Union i

2. Foreigners outside the European Union

How can foreign citizens from the EU buy real estate?

EU citizens can buy real estate in Croatia, i.e. acquire ownership of it in the same way as Croatian citizens. Regardless of whether it is a natural or legal person. The only exception refers to the fact that there are areas exempted from purchase that refer to agricultural lands and protected parts of nature.

The documents that foreigners need for the purchase process are an extract from the land register, an energy certificate and a building and use permit if it is a new building.

Further process of buying real estate

After you have obtained all the documents before buying the property, it is necessary to conclude a pre-contract. A pre-contract is not mandatory, but it is desirable. The pre-contract states the terms of sale of the real estate and the intention to buy or sell. In addition, it contains all the necessary information about that property as well as the obligations of the buyer and the seller.

Experts recommend that you hire a lawyer to draw up a pre-contract to make sure that everything is according to the law. Every detail is important, and a good lawyer will make sure to protect the seller and his interests. In order for the pre-contract to be valid, it must be certified by a notary public. Once you have made the final decision that you want to buy real estate in Croatia, you sign a sales contract with the seller.

What should be included in the preliminary agreement on the purchase and sale of real estate?

The pre-contract that establishes the conditions for the sale of real estate and the obligations of the seller and the buyer must contain the following information:

• all information about the subject of the sale,

• the seller's statement that he is the owner of the property,

• purchase price,

• date and method of payment of the price,

• declaration of assumption of tax liability by the buyer or seller,

• down payment amount,

• date of conclusion of the sales contract and other data.

What is a deposit and how much is it?

A down payment, we could say, is a deposit that the customer pays when concluding a pre-contract. The amount of the deposit is usually 10% of the value of the property. The purpose of the deposit is that if the buyer abandons the purchase of the property, the seller keeps it as compensation for the damage caused, which usually refers to the time lost waiting for the buyer's final decision.

If, for example, the seller abandons the sale, then in that case the buyer is entitled to double the amount of the down payment. Since neither party wants to unnecessarily lose the money invested in the process of buying and selling real estate, it may happen that the amount of the down payment is greater than 10% of the total value.

It is important to mention that the new owner cannot be registered in the land register on the basis of the preliminary agreement on the sale of real estate, but on the basis of the purchase agreement that contains all the information from the preliminary agreement, as well as other conditions of purchase.

How can non-EU citizens buy real estate in Croatia?

The process of buying real estate in Croatia for citizens living outside the EU is somewhat more complex than the process of buying by EU residents. To begin with, foreigners must obtain many more documents, and in addition, they must obtain the approval of the Ministry of Justice. It is about the Ministry of Justice checking the existing agreements on reciprocity with the country from which the buyer comes. The buyer can only obtain consent if it was concluded between Croatia and that other country outside the EU.

Is there an estate tax?

In Croatia, real estate tax is not paid, but real estate transaction tax. Therefore, the acquisition of real estate in Croatia, which is exempt from value added tax, makes the owner exclusively liable for the payment of real estate sales tax. The same applies to the local population as well as to foreigners, regardless of whether they come from the EU or from countries that are not members of the European Union.

Real estate becomes a taxpayer by purchasing or inheriting it. A fixed tax rate has been determined and is 3% of the total market value of the property. You are obliged to pay it within 15 days from the day you submitted the tax assessment decision. There are certain situations in which real estate acquirers are exempt from real estate transfer tax.

Latest articles