- This topic has 4 replies, 1 voice, and was last updated 4 years ago by David.
15/10/2017 at 13:14 #19371DavidGuest
Hi there !
I have a very pressing issue about buying a property in Romania that includes buying the land around it. Could anyone give me some advice me on this ?
15/10/2017 at 13:15 #19373DavidGuest
I’ve looked it up on the internet but all I could find was this ;
Land cannot be bought by foreign nationals, but only by Romanian individuals, and by legal entities, which however includes companies with foreign participation. However with Romania’s accession to the EU in 2007, foreigners will be allowed to purchase land (in 2007). As of now, foreign ownership is only possible (outside of legal entities) through legal inheritance. On the other hand, there are no legal restrictions on foreign ownership of buildings.
Before selling, the seller must present a “certificat fiscal” (fiscal certificate) to attest that the property has been registered with the fiscal authorities (“Circa Financiara”), and that all taxes due are paid. The seller is also expected to present a certificate (“certificat de sarcini”) attesting that the property is free from mortgages and other legal encumbrances and that the property does in fact belong to the present owner.
The notary then draws up a deed of sale (“drept de proprietate”).
The notarization of sale and transfer agreement regarding ownership of land is compulsory to make the transaction valid.
The transfer should be then recorded in the Land Register/ Real Estate Register.
Registration of property in Romania requires eight procedures and takes 12 to 25 days to complete.
15/10/2017 at 13:16 #19375DavidGuest
The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.
Property transfer is subject to stamp duty based on the following schedule:
PROPERTY VALUE, RON (€) RATE
Up to 15,000 (€3,333) 2.2%, minimum of RON150 (€33)
15,000 – 30,000 (€6,666) 1.6% on band over €3,333
30,000 – 60,000 (€13,333) 1.3% on band over €6,666
60,000 – 300,000 (€66,667) 0.9% on band over €13,333
300,000 – 600,000 (€133,333) 0.65% on band over €66,667
Over 600,000 (€133,333) 0.44% on all value over €133,333
Notary fees are paid by the buyer subject to the minimal fees established by the National Union of the Notaries. In practice, notary fees range from 0.44% to 2.20% of the transaction value.
Registration fees are around 0.50% to 2% of the property value.
Real estate agent´s fee:
Real estate agent´s fee is around 6% of purchase price, split between buyer and seller.
Individuals who sell Romanian property are liable to pay transfer tax, levied on the sales proceeds. The applicable tax rate depends on how long the property was held by the owner and the property value.
Transfer Tax for Property Owned for Less Than 3 Years
PROPERTY VALUE, RON (€) RATE
Up to 200,000 (€44,444) 3%
Over 200,000 (€44,444) 2%
Transfer Tax for Property Owned for at least 3 Years
PROPERTY VALUE, RON (€) RATE
Up to 200,000 (€44,444) 2%
Over 200,000 (€44,444) 1%
The 24% Value Added Tax (VAT) is charged on full price if the seller is a VAT payer (i.e. a company). However, transfer from a VAT payer to another VAT payer, and transfer of a business by way of a share sale are also not subject to VAT.
15/10/2017 at 13:18 #19377DavidGuest
Romanian law sets certain restrictions on who is allowed to own property. This will vary depending on the classification of the individual and the classification of the property:
Romanian citizens may freely buy and sell any property.
Foreign citizens (non-Romanian) may purchase a home or apartment in Romania, but they are not entitled to own the land itself that the property sits on. These requirements appear to be in a state of flux, particularly with regard to citizens of European Union countries. As time goes by, you may need to check these ownership laws again for any possible revisions.
Romanian companies or “legal entities” may buy property and own the land itself. It is possible, under the right conditions, for foreign individuals to create a Romanian company and then use that company to purchase land.
Real estate agents in Romania are not required to be licensed or covered by any governmental agency. You will want to be careful before selecting someone. When you are selecting a real estate agent to work with, ask about his or her credentials, experience with the properties in the area, length of time in the business, etc.
15/10/2017 at 13:19 #19379DavidGuest
After 2014 (a seven-year period following Romania’s joining the European Union), many restrictions on the ownership of agricultural land were removed. It is now easier for foreign individuals, particularly those who are citizens of European Union nations, to own agricultural land in Romania.
From 01.01.2012 all foreign non-EU citizens are ALSO able to purchase land in their personal name according to article 6 of law 312/2005 (in force since 01.01.2007). This article mentions that the conditions for owning land as a non-EU citizen cannot be less favourable than for those who are EU citizens. According to the same law art 4, any EU citizen is able to own land since 01.01.2012 (exception being agricultural land – extravilan) .
This also means that there is no obligation anymore for any EU citizen to show or have Romanian residence to own the adjoining land quota (which was the case before 01.01.2102). I do need to mention that interpreting legislation (or even applying it) depends on a good, well informed public notary. EU citizens are treated just like Romanian citizens & have no restrictions for buying.
I should also add the 5% VAT rule might apply when an individual buys a property from, for instance, a developer or even a company. As any company (e.g. developer, or foreign owner who has new property in his company) selling a property to a private individual, it has to invoice with the standard 24% VAT. But as a first time buyer in Romania, one can reduce the sales prices (which contains 24%) to a sales price including 5% VAT if the property meets certain criteria. According to Government Emergency Ordinance 200/2008, a modification on the Fiscal Code, individuals can buy with a reduced VAT rate if
the property purchase price excluding VAT is less than 380.000 RON equivalent in EURO
the usable surface space is < 120 square meters
the adjoining land quota is not greater than 250 square meters.
The 5% VAT rule (when as an individual buying a property from a Romanian company e.g developer) can be applied only once per person/family. As an example: a husband and wife can only benefit ones. If they are boyfriend girlfriend, and the girlfriend does not appear on the property title of the boyfriend, she also can benefit from the
5% VAT rule for a property she wishes to purchase.
Finance – how much does it cost to buy a property in Romania?
Here is a brief list of what you may expect in the way of purchase costs. Please be aware that these costs have changed dramatically over the last few years and you need to make sure exactly what they are when you buy.
At the time of writing they are as follows:
• Agent’s commission: When buying property in Romania the buyer and seller share the commission, which can be from 2 to 4% of the price per party. (We charge 2%). Be aware too that some agents also charge a daily viewing fee which will be refunded if you buy a property from them. We don’t charge this fee.
• State or Local tax: This is the equivalent of the UK stamp duty and is approximately 2 – 4% of the property price. It is set by the local municipality and may vary depending on the location of the property.
• Notary fees: The notary witnessing the purchase charges a fee of between 0.5% % 1% of the sale price. The fees are set by the government and depend on the purchase price of a property.
• Translator’s fees: As a non-Romanian, you are legally required to have all Romanian documents translated into your native tongue by a registered translator.. The cost of this will be approximately £50.
• Surveyor’s fee: This is optional and will vary but is usually not greater than €150 for most purposes.
• Value Added Tax: The sale of property for residential purposes is exempt from value added tax.
Additional info: some “brave individuals” thought they could build/buy many properties in a given year, renovate them, and then the next year sell them all at a profit. According to the interpretation of the fiscal code, many fiscal inspectors are now taxing VAT to those sellers who have made a continuous business out of it. Typically if an individual has a primary residence property and has a holiday home, and sells the latter, he/she wont have problems with the tax office even if the sales price of the holiday home exceeds 35.000 EURO. But if the same individual has 4-5 holiday homes, and sells them all in one fiscal year (the transaction value exceeding 35.000 EURO), VAT would need to be paid by the seller on each purchase. Therefore, instead of the seller going back to the buyer saying “You owe me VAT”, the buyer should be protected in all cases as one can never
know if the seller makes a business out of it. As mentioned, the seller in this example is an individual (as companies may sell as many properties as they want, for which they are being taxed anyhow -VAT and profit tax-)
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