Tax Refund for Buying Your First Property – Who is Eligible?

In recent years, having a roof over one’s head has become an impossible mission for many citizens of the Republic of Croatia. The reasons are various. With Croatia’s entry into the European Union, Croatian real estate became attractive to foreign investors, and high demand led to rising square meter prices. The introduction of the euro, geopolitical events, inflation, and other economic fluctuations have further disrupted the plans of those who, with average incomes, dreamed of their dream home.

Solving the housing issue is ubiquitous in society, and it is also, from election to election, often used to score political points. The government, in particular, has for years attempted to alleviate the housing issue with various measures, such as introducing a property tax to encourage affordable housing, subsidized APN loans, or the construction of POS apartments.

The property tax refund is the latest and yet another commendable move in housing policy.

Property Tax

To understand what exactly is refunded, we need to recall what the property transfer tax actually refers to. Property transfer tax is a one-time tax borne by every property buyer in the Republic of Croatia, whether a domestic or foreign citizen, and amounts to 3% of the total purchase price.

For the purchase of new construction, directly from the investor or the company in the VAT system, this tax is not paid because the VAT of 25% is included in the purchase price.

The payment slip for the property tax is sent by the tax administration within thirty days after the conclusion of the purchase agreement. The property owner must pay the tax within three weeks after receiving the payment slip.

Those who are not familiar with the additional costs of buying property are often unpleasantly surprised when they receive the payment slip.

Who is Eligible for the Tax Refund

The right to a tax refund came into force on June 4, 2025, with the Regulation on Support for Acquiring the First Residential Property.

The tax refund is available to all Croatian citizens who are purchasing their first property and who, at the time of submitting the request, are under 45 years of age. This applies to the applicant and their immediate family members. For example, if the husband is purchasing a property, the wife must not be the owner of another property.

Another condition is that the purchase agreement for the first property must be concluded no earlier than January 1, 2025. Furthermore, the property must be purchased exclusively for residential purposes and not, for example, for renting out. In the case of building a house, the tax refund is possible if the occupancy permit was issued after January 1, 2025.

The applicant for the refund must be a Croatian citizen, meaning that foreign citizens cannot claim the refund.

The applicant must have registered residence at the address of the property for which they are requesting the tax refund.

Which Taxes Can Be Refunded

This measure applies to the refund of the property transfer tax paid when purchasing both old and new properties. Since taxation differs for these two categories, the amount of the refund also varies.

For the purchase of old properties, the new owner receives a full refund of the tax paid, i.e., the mentioned 3%.

For new construction, since the VAT of 25% is already included in the price, the new owner, through the tax refund, receives 50% of the paid VAT.

Conditions Related to the Property

To prevent abuse of this measure, conditions have been set regarding the apartment size and the price per square meter. The government has tried to differentiate between those who purchase a property for resolving their housing issue and those who buy it for comfort or as an investment.

The tax refund is therefore available to a single person who purchases an apartment up to 75 m² (with a maximum 50% increase, i.e., up to 112 m²). For a two-person family, the limit is 97 m², for a three-person family 120 m², and for a four-person family 135 m² (with a 50% variance in square footage). For example, if a single person purchases an apartment of 150 m², they will not be entitled to a tax refund.

Additionally, the price per square meter must not be 50% higher than the average price for an apartment square meter in the local municipality. For example, if the buyer pays more than 5193€ per square meter for a new property, they are not eligible for a refund.

Also, those who have previously used any form of housing subsidy are not eligible for a tax refund.

Procedure for Submitting the Request and Obligations After Receiving the Refund

The buyer submits the tax refund request to the Agency for Legal Transactions and Mediation in Real Estate (APN) within two years after the purchase agreement. It is important to emphasize that the buyer must first pay the tax before requesting the refund. APN receives all requests and processes them in the order they are received.

The tax refund will be paid within three months after the request is submitted, if it is approved.

If the recipient of this measure rents out or sells the apartment or does not reside in it for more than five years, they must repay the refunded tax.

When submitting the request, the following documentation must be provided: account number for payment, proof of paid property transfer tax, proof of residence, a copy of the ID card, the purchase agreement, and an excerpt from the land registry.

Example of Tax Refund Calculation

For example, let’s say a single person buys their first property in Split, an apartment of 60 m² for a price of 4,500€ per square meter, or a total price of 270,000€. If it’s an old property, the buyer can get a refund of 8,100€. If it’s a new property, the buyer can receive a tax refund of 22,500€.

Conclusion

The tax refund for buying your first property is an important measure aimed at helping citizens, especially younger ones, resolve their housing issues more easily. It enables a significant refund. The right to this measure is only available to those who meet strict conditions – related to age, ownership, citizenship, property purpose, square footage, price per square meter, and residence.

This measure is aimed exclusively at those who buy their first home for living, not as an investment. It is certainly a useful and encouraging measure that will significantly ease the first step towards independent life and homeownership for many young people.