The stunning coastal landscape and magnificent countryside have made Croatia one of the hottest destinations to invest in real estate in Europe. The investors have a wide choice to buy seafront villas, old stone houses, residential apartments, condominiums and holiday homes as per their living requirements. Listed below are some tips to buy property in Croatia.
The process of buying real estate in Croatia is similar to buying property in most European countries. It is important to accurately establish the title of property in Croatia as houses are normally passed through several generations of the same family without the land registry updated properly. Once you have shortlisted the property you want to buy and agreed upon a certain price with the seller, it is customary to sign a reservation contract stating your commitment to the sale. It is advisable to engage an English speaking real estate agent to negotiate the property deal and a competent lawyer who will guide you about the real estate laws and documentation involved in the purchasing process.
As in the case of most European countries, a preliminary contract is signed between the buyer and the seller before the final contract. This contract binds them to the sale and includes details of terms and conditions which they have to adhere to. A 10% deposit has to be made by the buyer at this point. As a foreigner buying privately owned real estate in Croatia one requires a permit from the Ministry of Foreign Affairs which can be a time consuming process.
Once all the formalities and real estate documentation is in order, the final contract of sale has to be signed by the buyer, the seller and the notary public responsible for overseeing property sales and land registrations. Following this the notary ensures that the buyer’s ownership is registered on the Croatian Land Registry and he is required to pay all outstanding fees and taxes which include legal fees, property transfer tax, permit application fee, notary and translator fee and land registry fee. Some local taxes are levied on an annual basis including Holiday Property Tax and a Non-Residents Tax. Both are charged based on the floor space of the property.
While Croatia is rapidly modernizing, the real estate industry follows rather archaic government bureaucracy and processes and it is advisable to ensure all necessary checks are carried out throughout the buying process. Croatian property is likely to appreciate over time and one can expect good return on investment as it will be a solid investment into the future. If you keep the property for at least three years before selling, you won’t be liable for any Croatian Capital Gains Tax at the time of selling. If you buy a new property from the real estate developer, you can reclaim the PDV (Value Added Tax) of 25%. Only approved nationalities are currently allowed to own property in Croatia and only certain types of property can be owned by foreign nationals. The Ministry of Foreign Affairs ensures that the real estate investors meet the prescribed criteria and the approval period can take fifteen days to one month.