Bulgarian Real Estate Tax: What Buying, Renting Out and Selling a Property Really Costs

This guide focuses on one question: what does buying property in Bulgaria really cost? It covers what you pay on purchase, on rental and on sale, and the terms offered by local banks to foreign buyers. The figures below are correct as of the date of publication (July 2026).

1What are the purchase costs in Bulgaria: notary fee, registration fee and local transfer tax?

In a direct property purchase, three costs apply cumulatively. The buyer usually bears them, unless otherwise agreed.

The local transfer tax is the most significant of the three costs.

2What is the tax advantage of a share deal in Bulgaria?

When a property is acquired through a share deal (buying the company that holds the property), only a limited notary fee for certifying the share transfer agreement and a small fee for registration at the commercial register are payable, with no local transfer tax and no property registration fee at all. The sale of shares is also exempt from VAT.

On a EUR 1 million transaction in Sofia the difference is about EUR 30,000, which is exactly why many large commercial transactions are structured as share deals. The trade-off is deeper due diligence on the company itself, including past liabilities.

3When does VAT apply to property in Bulgaria?

The sale of buildings less than five years old, together with the adjoining land, is subject to VAT at 20%. Buildings more than five years old, and land that is not a regulated plot, are exempt from VAT. The seller has the option of charging VAT even on an exempt transaction, for its own reasons (mainly to be able to deduct input VAT).

When buying a new apartment from a developer or contractor, VAT is usually already included in the advertised price, but this should be expressly confirmed in the contract.

4How much capital gains tax does an individual pay on selling property in Bulgaria?

An individual selling property in Bulgaria is taxed at a flat 10% on the gain, which is the difference between the sale price and the documented purchase price, less a 10% statutory deduction. For a non-resident foreign seller, the tax is collected as a final withholding at the same rate.

Bulgarian law grants particularly generous exemptions:

• The sale of one residential apartment per year is fully exempt from tax if the property was held for more than three years.
• The sale of up to two additional properties is exempt if they were held for more than five years.
• Property received by inheritance is always exempt.

Put simply: an investor who buys, holds for three years and sells pays no capital gains tax at all. By comparison, according to the original article, Portugal taxes capital gains at up to 28% and Spain at 19% to 26%. This is one of the most favorable regimes in the European Union for a patient investor.

5What is the tax when a Bulgarian company sells a property?

A Bulgarian company selling a property is subject to a flat corporate tax of 10% on the profit, the lowest rate in the European Union and the same as the rate applying to individuals. Distribution of the profit as a dividend to a foreign shareholder is subject to an additional withholding tax of only 5%, also among the lowest in Europe.

The combination of 10% corporate tax and 5% dividend tax makes a holding structure through a Bulgarian company (OOD), which is in any event necessary for Israelis when land is involved, convenient from a tax perspective as well.

6How much tax is paid on rental income in Bulgaria?

An individual's rental income is taxed at a flat 10%, after an automatic expense deduction of 10% of the gross amount, without any need to present receipts. The effective tax is 9% of gross income. For example, on annual rent of EUR 10,000 the tax base is EUR 9,000 and the tax is only EUR 900.

For an owner who rents out through a company, the income is included in the profit subject to 10% corporate tax (after deducting actual expenses).

7How much do annual property tax and the waste collection fee cost in Bulgaria?

Annual property tax is set by each of the 265 municipalities within a statutory range of 0.1 to 4.5 per mille (per mille, not percent) of the property's tax assessed value. The tax assessed value is usually 3 to 5 times lower than the market price, so actual amounts are very low. In Sofia, for example, the rate is about 1.875 per mille, and the owner of a typical apartment actually pays tens to a few hundred euros a year. Paying the full tax by 30 April earns a 5% discount.

In addition to the tax there is an annual waste collection fee, which is often higher than the tax itself. An important regulatory change to be aware of: Bulgarian law provided for a move to a new calculation method based on the "polluter pays" principle (charging according to the actual quantity of waste, instead of a percentage of the tax assessed value), but implementation of the reform has in practice been postponed, and most municipalities, including Sofia, continue for now with the old method. Property owners, and commercial property owners in particular, need to follow the decisions of the specific municipality, because the calculation method that is adopted may significantly change the amount of the fee.

8How does the euro affect an Israeli investor in Bulgaria?

Since 1 January 2026 Bulgaria has been a member of the eurozone, and all assessments, taxes and payments are conducted in euros. For the Israeli investor this is a quiet but significant tax and operational point: there is no longer any need for conversions into the lev, there is no exchange-rate risk between the currency of the property and the currency of the income, and comparison with other European markets is made directly in the same currency.

9What additional costs should you budget for?

• Equity for the down payment.
• Fees of an independent lawyer.
• Costs of setting up a Bulgarian company: when the transaction involves land, about EUR 500 to 1,000 for incorporation, plus ongoing bookkeeping.
• Notarized translations and apostille.
• Brokerage commissions.
• A financial reserve for unexpected situations.

10How does bank financing work for foreign buyers in Bulgaria?

When the purchase is financed by a bank, the mortgage takes effect upon signing a notarial mortgage deed and registering it at the property registry. The mortgage registration is valid for ten years and can be renewed before the end of the period. A late renewal restores the validity of the mortgage, but gives it a new priority ranking only from the date of renewal. This is a critical point from the bank's perspective, which is why banks are careful to renew on time.

Major Bulgarian banks also provide financing to foreign buyers, but on terms that differ from those offered to residents:

The bank requires the property to be free of any prior encumbrance, carries out its own independent due diligence and valuation, and does not release the loan funds before its mortgage has been properly registered at the property registry.

11What should you do before signing a purchase in Bulgaria?

Before signing, it is worth checking the transfer tax rate of the specific municipality, confirming in the contract whether VAT is included in the price, considering whether a direct purchase or holding through a company suits you (for land, a Bulgarian company is in any event required for Israelis), and budgeting for the additional costs. This is best done with an independent lawyer and an accountant familiar with both Bulgarian and Israeli taxation.

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The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.