Logistics of buying property in Croatia
If you are planning to buy property in Croatia then you need to be well versed with the laws governing the foreign ownership of the real estate in Croatia. Property boom started in Croatia from the year 2000 onward and it opened up to foreign investors who made a beeline to invest in Croatian real estate for maximum gains. European Union citizens got preference for investing in Croatia as they were able to buy the real estate on the same terms as local Croatians except for agricultural land. Sizeable numbers of foreign investors have bought commercial, multi-family residential and holiday real estate holdings over the course of the past two decades.
For property transactions in Croatia the investor must hire a competent lawyer who acts solely for him. Majority of foreign nationals investing in real estate in Croatia are the individuals who have migrated to the country for business purposes. The basic provisions of the laws governing real estate ownership by foreign nationals state that if the country of origin of the foreign citizen allows a Croatian citizen the ability to own real estate, Croatia, in turn, will allow that foreign national the ability to purchase and own real estate in Croatia.
A foreign national must obtain permission from the Croatian Ministry of Foreign affairs before investing in Croatian real estate. The Ministry must verify the ultimate ownership interests when real estate is being purchased by a foreign national. The first step in the process is the execution of a sales contract between the parties. This agreement is taken to the Ministry of Foreign Affairs together with a written petition seeking approval from the Ministry. The deed cannot be filed in the Land Books of Croatia by a foreign national without the necessary papers approving the purchase as prepared and issued by the Ministry of Foreign Affairs.
Once you buy property in Croatia you are required to make a certain deposit when the initial agreement for the purchase of property is executed. Usually, it is 10% of the overall cost of real estate. Upon approval from the Ministry of Foreign Affairs and execution of the final contract, the buyer is responsible for paying the balance amount due to the seller. Currently, the property transfer tax is 3% and the buyer is liable to pay this tax.
The change of ownership generally happens within thirty days. Value Added Tax (VAT) at present in Croatia is 25% of the property value but if you are buying a new apartment from a company, the seller will pay the VAT. In all other cases, buyer pays 4% tax on the purchase price. VAT of 25% is also charged on the services provided by both legal expert and real estate agent. Some builders and developers offer mortgage facility on their properties for sale which can be beneficial for both the parties depending on the logistics of the mortgage.