Taxes and Fees When Buying Real Estate in Croatia – Everything You Need to Know

Buying real estate in Croatia involves several types of taxes and fees that are important to consider. The first and most important is the real estate transfer tax, which amounts to 3% of the determined value of the property. In addition, buyers often bear the costs of notary services and land registry registration fees. There may also be a need to pay capital gains tax if the property is sold within a certain period after purchase. Throughout this process, a real estate agency provides professional support and security.

Introduction to Taxes and Fees When Buying Real Estate in Croatia

With every property purchase in the Republic of Croatia, the buyer must take into account the taxes and fees that must be paid. Among the first costs that arise are notary fees and valuation costs used to calculate the fundamental taxes, such as the real estate transfer tax.

Real Estate Transfer Tax (PTN) – A Key Cost for Buyers

The real estate transfer tax (PTN) is one of the key costs that all buyers face when acquiring property. This tax, which is calculated based on the purchase price of the property, can significantly impact the total cost of purchase and, consequently, influence the final decision to buy. As the real estate market becomes increasingly dynamic and interest in property ownership grows, it is essential to understand the principles of this tax calculation, its rates, and how it affects the final amount that buyers must pay.

What Is the Real Estate Transfer Tax and Who Has to Pay It?

The real estate transfer tax (PTN) is a mandatory fiscal charge payable upon the purchase or any other form of ownership transfer of real estate, such as apartments, houses, or building land. This tax is usually calculated based on the market value of the property or the purchase price, depending on which amount is higher. All property buyers are required to pay this tax, except in exceptional cases where the tax does not apply, such as ownership changes through gifting, inheritance, or divorce.

What Is the Real Estate Transfer Tax Rate in 2024 and 2025?

According to available information for 2024 and 2025, the real estate transfer tax (PTN) rate in Croatia remains at 3% of the market value of the property or the purchase price, depending on which of the two amounts is higher. However, it is important to note that certain tax reliefs or exemptions may apply, such as tax reductions for first-time homebuyers or specific groups of citizens, which can influence the final amount payable. Buyers are advised to stay informed about local regulations and potential legislative changes that could affect this tax rate.

Value-Added Tax (VAT) – When Does It Apply?

Value-added tax (VAT) on real estate applies in specific situations related to the sale and construction of properties. In Croatia, when a newly built property is sold to the first buyer, VAT is charged at the standard rate of 25% and is included in the apartment price, while the developer is responsible for paying it to the state. As a result, the buyer is exempt from paying the 3% real estate transfer tax. This tax also applies to services related to construction, such as construction work on building projects. On the other hand, the sale of used properties is exempt from VAT and is subject to the real estate transfer tax of 3%.

Notary and Legal Fees

Notary and legal fees are costs that arise when purchasing real estate and include fees for notary services and various legal services. Notary fees cover the costs of certifying the sales contract as well as the certification and solemnization of other relevant documents required for the transfer of ownership. Depending on the property value, these fees can vary significantly.

In addition to notary fees, buyers typically also bear the costs of legal professionals who can provide advice, verify ownership documents, and ensure that the purchase process is legally sound. The easiest way to buy real estate is to engage a real estate agency that guides the buyer through the entire transaction process, with agency fees often including all notary and legal costs.

Registration Fees for the Land Registry and Cadastre

Registration fees for the land registry and cadastre are costs incurred during the transfer of property ownership. These fees generally include administrative charges paid by the buyer to ensure that the new owner is registered in the land registry and cadastre. Depending on local regulations, costs may vary.

Registering ownership in the land registry and cadastre is a crucial step as it ensures legal security of ownership and prevents potential disputes in the future. These fees, therefore, represent an important part of the property purchase process and a valuable investment in protecting ownership rights.

Banking Costs and Financing Fees

This type of cost relates to expenses associated with obtaining a mortgage loan for purchasing real estate. These costs may include various fees, such as loan processing fees, property valuation costs, and notarization fees for the loan agreement. Additionally, interest on the approved loan represents a significant part of financing costs, and its rate depends on various factors, including the buyer’s creditworthiness and the terms offered by the bank.

When planning a real estate purchase, it is essential to consider all banking and financing costs, as they can significantly impact the overall purchase cost and the buyer’s budget. In any case, thorough research and comparison of offers from different banks are recommended to select the most favorable option.

Conclusion

Taxes and fees associated with buying real estate in Croatia are an important part of the process and can significantly impact the total transaction cost. Buyers need to be aware of various expenses, including the real estate transfer tax, which amounts to 3% of the property’s market value, as well as land registry and cadastre registration fees. Additionally, banking costs and financing fees also play a key role in shaping the final purchase price.

Therefore, it is crucial for potential buyers to be well-informed about all relevant taxes and fees in advance, enabling better financial planning and transparency in the property purchasing process. Considering all these costs, buyers can achieve greater legal and financial security by engaging the services of a real estate agency, which simplifies the process of acquiring their own property.