Buy your dream property with
Welcome to CasaGlia.ro, your trusted realtor in Romania!
So, you are you looking to buy real estate properties in Romania! Excellent choice!
The real estate agency Casa Glia can help you find the best options for your real estate purchase in Romania.
However, before diving into such type of acquisitions, you should read carefully the following tips and tricks for buyers looking to buy real estate properties in Romania. They will help you avoid costly mistakes as well as lengthy procedures.
Here are a few things you should consider when it comes to taxation in Romania for income resulting from renting out your properties.
If you are a sole investor and you buy a property to rent it out, keep in mind that if you are a fiscal resident in Romania, the applicable income tax (as per 2023-2024) for gains resulted from renting out your properties will be taxed at a flat fee of 10%.
Starting with June 1st 2023, the deductible lump sum of 40% for owners no longer applies.
Before this date you could benefit of a fixed rate of 40% rebate on your taxable income, so that if you earned 100 euro, you could deduct 40 euro as … let’s call it “generally deductible expenses”, and as such you would have paid only 10% tax over the 60 euro left, bringing the net tax to just 6 euro over those 100 euro earned.
Beginning June 1st 2023, owners that rent will be taxed with 10%, making it a net tax of 10 euro over those 100 euro earned.
You have till May 25th of the next year to declare the income and pay the tax. If you do not do this, you may be subject to hefty fines.
Do you own a residential property in Romania and you rent it out to private individuals?
Since June 1st 2023 new regulations apply and you as owner of the property are required to keep a so-called house register with the personal details of all the tenants that you rented out or you currently rent out to.
If you own one or more apartments in an apartment building, you need to consult the building administration and inquire about this registry.
The owners will have to accompany the tenants to the authorities, to take them into the property within a maximum of 15 days (compared to 30 days before) and to register them to this address in the identity card.
Also, the rental contracts must be filed with the National Fiscal Administration (NFA is the equivalent of the American IRS, Dutch Belastingdienst, German Finanzamt) within 30 days.
To avoid the bureaucratic hassle, it’s a good idea to draw-up contracts with a predetermined validity period, of let’s say 12 months. By doing this, when the contract expires, you do not need to notify the NFA of its expiration.
If you are not a fiscal resident in Romania, you may be eligible to opt—out of the compulsory 10% income tax, but in this case you must file your income statement in the country of your fiscal residence.
The NFA will require several documents from your country of your fiscal residence in order to apply the tax exemption. For details about these fiscal matters, consult with your accountant.
In case the option of buying a property in Romania to rent it out as a sole investor does not look appealing to you, you could consider a more tax-efficient alternative: buying a property as a company asset (active) and put it on the balance sheet of the firm.
Why? Due to the tax regime.
As a shareholder in a company you do not have to pay tax on the income generated by the company itself, but in case you cash-in dividends, you must pay income tax only on those dividends.
The company has to pay a tax ranging between 1%, 3% or 16%, depending on its core business, gross income, profitability rate and number of employees.
Good to know: in order for a company to be able to rent its properties out to tenants, the LTD must have the CAEN code 6820 in its constitutive document and this code must be declared active with the Chamber of Commerce. This is applicable even if the company has a different main CAEN code.
For instance, let’s assume you have an IT business. In this case the primary CAEN code for this company is 6201. However, if the company wants to purchase and rent out properties, then the firm must choose the CAEN code 6820 as a secondary code and it must activate this code with the CoC, prior to purchasing and renting out any real estate property. If this is not done, then all the gains resulted from renting the properties can be regarded as illegal proceeds and can be retained up to 100% by the NFA.
Another incentive to purchase real estate on a balance sheet of a company, is the fact that all expenses related to the property are deductible, should the company have all the legal paperwork squeaky clean.
If by now you are confused by all the rules and regulations, don’t worry. Our real estate agency has the know-how to help you navigate all these hurdles. Our clients benefit of assistance and guidance along the way, so that the process of purchasing a real estate property in Romania can be as smooth and as efficient as possible.
And if you ask yourself whether our real estate agency can help you set up a company, the answer is “yes, but…”. Yes, we can help you set up an LTD in Romania, but it depends in which city. We currently serve Arad and Timisoara counties. For the rest of the counties, we can assist you through intermediaries and external partners.
- a) Seller-related costs, such as taxes and building-related costs such as energy label, insurance, evaluation
- b) Buyer-related costs such as notary honorarium and realtor costs (if applicable)
The costs under a) are borne by the seller.
The seller must prepare the property before the transaction takes place and must provide the buyer with a special file, called an energy label.
Since January 1st, 2024, the seller is obligated by law to sell you the home with a valid home insurance policy.
In addition, the seller must pay the local taxes for the current year. How much the local tax is, depends on the city zone and on the type of property (residential, offices, industrial, etc.).
In case the seller is a sole investor, please bear in mind that the current transaction tax (valid for 2023) is 1% for properties held in your portfolio for a duration longer than 3 years and 3% for properties held in your portfolio for a duration shorter than the aforementioned interval. There are plans to increase this tax, from 1 to 3% and from 3 to 5%, respectively.
The seller must provide a valid tax document for the building.
The legal status of the property must also be clear. This information is stated on the land registry excerpt (ECF).
Our real estate agency can help you obtain the ECF and correctly interpret the legal information contained therein.
If you do not have such documents, the sale is void.
The costs under b) are borne by the buyer.
In general, it is an accepted practice to pay the full amount of the transaction on the day of signing at the notary.
Please note that payment of the costs mentioned under b) must be done on the day of the transaction.
You cannot pay afterwards. Make sure there are sufficient funds in your bank account.
Starting November 1st 2023 you will no longer be able to pay in cash amounts larger than a few hundreds of euro.
Proof of payment: the buyer must provide the notary with an proof of payment, the seller must provide a bank statement showing receipt of the funds.
This must be done within a maximum of 3 to 5 days, or according to the agreed upon payment plan.
And contrary to the myths, no, you will not be the rightful owner of the property if you signed the papers but you didn’t pay for it in full.
After payment has been made, the notary will register the deeds at the Land Registry on behalf of the new owner. If either party cannot comply with this request, the sale is void.
From this moment on, you – as the new owner, must change the record data with the local and national registry, as well as with the utility suppliers. The legal period to do so is 30 days. Please note that insurance must also be transferred.
Are you planning to buy newly built properties?
Pay close attention! The tax rules will be changed as of January 1st, 2024.
For specific types of properties, real estate developers will charge 19% VAT instead of 5%.
If you purchase the good on behalf of a company, part of the VAT is deductible. An accountant can help you with further details. If you buy as a sole investor, VAT is not deductible.
Representation by a real estate broker
There is no obligation for the buyer or for the seller to be represented by a realtor.
You are free to choose to conclude the transaction with or without representation by a broker.
However, it is a good idea to work closely with a real estate broker simply because they know the specificity of the business and the market conditions, probably better than you do. In many cases a good broker can save you a lot of money by getting you a better deal and helping you zig zag various hurdles in a much more effective way than you would do it yourself.
In the end it is up to you whether you want to employ a real estate specialist or not.
Costs of brokerages
Each brokerage firm has its own policy when it comes to fees and commissions.
Most agencies charge a commission ranging between 2,4% and the maximum allowed by law of 6% (including 19% VAT).
This commission relates to the transaction itself and it is paid only if a buyer decides to purchase the real estate in the portfolio of the real estate agency.
For urban residential properties, Casa Glia – our real estate agency – charges a fee from 2.87% (including 19% VAT) calculated on the purchase price of the property. For land, industrial and office buildings, the commission is higher.
There are cases when the buyer does not buy a specific property, which is in the real estate agency’s portfolio, and the client wants something completely different.
In such cases, fixed operating costs apply. These costs can vary between several hundred euros and several thousand euros, depending on the type of property and its location.
In order for our agency to be able to deduct all costs incurred with finding a suitable property, a so-called representation contract must be signed. In this agreement you can read what we do for you and what we charge for our services.
Without a representation contract, we cannot deduct our costs and we cannot assist you.
Well, the answer is „yes and no”.
As a sole investor, you have very limited options to dodge the taxes. As a company however, you have some options, provided that specific steps and procedures are followed. We gladly assist our clients with all the legal requirements regarding this topic.
We provide a wide range of services related to the sale and purchase of a real estate property in Romania. Broadly speaking, we actually do everything a buyer needs to do:
searching for a suitable property, checking the legal paperwork, discovering potential defects in the property, identifying potential problems, informing the buyer of all legal and tax steps, assisting the buyer every step of the way to the transaction.
After-purchase services:
Property management of real estate projects in Romania
Rental and leasing of real estate projects in Romania
Development of real estate projects in Romania
In order to invest efficiently in real estate in Romania, first of all, we recommend you define clearly what exactly you want to buy, where do you want to buy and for what purpose do you want to buy.
Once you know the answers to these 3 very important questions, only then you should start looking for a suitable property that meets your goal criteria.
Do you know the answers already? Great!
Check out our grade real estate portfolio and investment-grade real estate properties in Romania. Should you find something on your liking, give us a call. We’ll be glad to assist you further and farther in your endeavor!
Expats looking to buy real estate to Arad, have now the possibility to buy residential properties, safely and securely, using our realtor services in Arad and Timisoara.
Give us a call to discuss your needs. Our real estate agency is specialized on the western part of Romania and can help you find the best options in Arad county as well as Timisoara county.
Looking to invest a sizable budget in real estate in Romania? Check out some of the real estate projects available at the moment. From office spaces to industrial projects. we can assist you in meeting your goals.
Transaction security
We check the accuracy of the property deeds before contracting
Advice
We offer advice for both owners and buyers
Assured Transparency
We work transparently and advise both parties up to the moment of the transaction