Property Purchasing Costs in Montenegro
If we talk about buying real estate in Montenegro , the process is much simpler compared to some other countries . However, there are some provisions regarding the sales of properties to foreigners and their related rights. Being familiar with these is very useful for a lot in avoiding waste of money and time.
Foreign nationals and companies are able to purchase property in Montenegro. Foreign individuals may buy houses or apartments on the territory of Montenegro, but they cannot purchase land. Land (if not less than 500 square meters) can only be purchased by registering their own company in the country, and including as a subject of commerce this land through a registered company.
Navigating the Purchase Process and Establishing Ownership
1- Purchase formalities : The process of purchasing property in Montenegro involves several steps . The process starts with communicating and bargaining terms for the purchase as you would do anywhere else. A contract binds the two sides and in Montenegro, this must be validated by a local court (more details on that later).
2- Once this is accomplished and the purchase contract becomes a final, signed document verified by both parties, there will be a charge in property transfer tax for the buyer. The council’s local authority decides how much this tax is which they work out based on the property’s market worth.
3- Transfer tax can be paid by the buyer and seller – Once both parties have satisfied this step, they will make an official confirmation of their purchase contract. A registered confirmed contract may be entered in the Area Property Register. Then, the buyer will pay for the property in line with the purchase contract to the seller and establish to complete this transaction.
Breaking Down the Costs of Property Purchase in Montenegro
In addition to the purchase price, there are costs related to owning property and purchasing in Montenegro beyond.
● Transfer Tax
The first among these additional costs is the Property Transfer Tax, also referred to as the Purchase Tax. When a property transfer is in progress, the parties involved apply to the Local Council Offices for the Transfer Tax. The Inland Revenue Office determines the property’s market value, and following this valuation, the buyer pays 3% of this value as the Transfer Tax. It’s important to note that the buyer is responsible for covering this Transfer Tax.
All transactions of buying real estate in Montenegro are subject to the imposition of Transfer Tax, apart from those that deal with overbuilt properties. Instead, the tax due will be Value Added Tax (VAT) on new construction properties.
● Value Added Tax (VAT)
Note that when purchasing a newly built property you must factor in Value Added Tax (VAT) and not- Transfer Tax. VAT is charged only on the sale of newbuild properties and amounts to 19% of their purchase price (preparing for an increase in this rate up to 21%). Buyers must also make sure that the price offers they receive specifically indicate whether or not VAT is included.
● Notary Fees
All Montenegrin property transfers/purchases must be registered by a Notary, which adds to the expense of these services in regard to each notarial office handling your account. Basically, these registrations cost money in Montenegro – notaries charge for them a little bit of the property value (well under 0.01%). Again, these Notary Fees are paid by the buyer.
● Real Estate Agency Fee
If you use an intermediary real estate agency to get the house, they too take a fee for their services. This agency fee is charged between 3% – 5% of the property price depending on your properties status. In general, these Real Estate Agency fees are paid by the property sellers themselves.
● Legal Counsel Fees
Although not a must, it is advisable to involve a lawyer in the procurement process of the property just take so as you safeguard your interests and that also there are no loopholes left from the purchase contract. The expense of legal services will vary depending on the provider, and it’s advisable to obtain a quote from your lawyer. In general, lawyers also offer this at prices between 300 Euros to even up going all the way to about 500 Euros. Nonetheless, certain legal professionals would possibly ask for a percent of the belongings rate instead.
Total Property Purchase Cost in Montenegro
Based on the mentioned additional expenses, potential property buyers in Montenegro should be aware that they are legally required to add up an extra 3.59% of their real estate purchase price for all fees and taxes properties breaking down from a single complete figure. This 3.59% refers only to pre-existing buildings purchased. For new properties, 19.02% of the price (17% VAT plus transfer tax) ■
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