If you buy real estate in Albania you are not to pay any taxes at all, except the public notary costs, that is not more than 200 euro. There is no federal annual property tax either. Though in Tirana there is a municipality tax of 20 euro every year. Recently there were discussions about the eventual possibility to set such a tax as 1 euro for 1 sq m per year.
For the persons who run their commercial activity the tax rate of the profit tax is decreased to 20 %, if you rent your real-estate the rate of your profit tax is equal to 10 %. The legal persons should pay stamp tax that is equal to 3% of the price of the real-estate that is resold, there is no such tax for individuals who resell their property.
The most important thing is that foreigners and local citizens have the same right when they buy the property no matter where: in Tirana, on the seacoast or other towns.
- Can an individual buy real estate in Albania?
- There are no limitation. For example, in comparison with Montenegro it is not necessary to open up a firm to get the status of the legal person. There are limitation only concerning the purchase of the agricultural areas.
- When is it necessary to start a firm up in Albania?
- Only in the cases you are planning to buy agricultural land, begin your own commercial activity or you want to finance the purchase of the real estate with mortgage loan. All the taxes will make up 600-1000 euro (charges for creation a firm, registration costs, court confirmation, public notary costs and others). The commercial activity is an object of taxation via licenses and local taxes.
- How can you get Mortgage credit in Albania?
- In Albania mortgage credit is available for a person who is not an Albanian resident. All the banks are under the control of such European giants as Reiffaisen, Societe General, Pireus Group, CrediAgricol. All of them offer competitive credit programmes with different payout time from 1 year up to 20 years.
- Where can you notarize your purchase contract?
- Your purchase contract must be officially notarized. It can be composed by public notary, lawyer, law consultant or the sides of the contract themselves. In this case there are no definite regulations and limatations in the Albanian legislation. In case when the contract is composed by a non-professional individual (no lawyer, no notary) public notary will take all the responsibility for all the conditions mentioned in the contract. When you are busy with such things as a purchase contract, it is always better to contact the special firms that specialize in that, they have specialists, they will provide you with the complete documentation packet, translation if needed, composure of the contracts, tax consultations etc.
- Does notary check whether the bargain is clean?
- Public Notary is responsible to full extent for defining if the original property documents are genuine, those documents are given by ZRPP (the office of real estate registration). According to the law the notary must check the history of the estate in question from the beginning up to the moment of purchase, when the final purchase contract is being signed.
- How much are the services of notary public?
- As a rule the fee of the notary public depends on the list of the services provided, the size of the estate and its price. If the price of the purchase itself is equal to 100 000 euro, then the fee of the notary public will be equal to 200 euro, purchase of 300 000 euro – the fee of 300 euro.
- What taxes should be paid if the real estate is being resold?
- The size of the profit tax is 3% from the price of the estate. This tax is paid by Seller according to the passing all the rights towards Buyer. This tax must be paid via bank where the special acoount of Real Estate Registration Office’s account is open. If it is land that is being resold, then you are to pay only 0,5 % of the price of the contract and this tax is valid only for legal persons.
- Does a Buyer have to pay taxes?
- Buyer must pay only for registration of his property.
- What steps should be taken while purchasing real estate in Albania?
- First you are to sign so called reservation contract that will confirm that you are willing to buy a definite piece of real estate. After this the period of four weeks begins, when all the standard checks are done necessary to be ready to sign a preliminary contract. Seller should visit Real Estate Registration Office in order to get the document that will be a proof of his property rights. This document contains information about the amount of real estate, its location, name and last name of a co-owner (if exists), the area of this real estate, also information whether this real estate is not a matter in dispute, mortgage etc. Such a certificate costs 250 euro. If the price of the purchase contract is pretty high, it is always better to perform a check in order to avoid difficulties about the area of the estate, to verify the borders of the estate which are registered in the planning documents. Such a check is performed by a topographer and paid by the buyer (average price is 1 euro per 1 sq m). Then both sides sign the preliminary contract in which they confirm to sign the final purchase contract. When all the data and documents are provided by the lawyers of the builder, where every detail is registered: schedule of payments, price, conditions of payment and other respective details. After the preliminary contract is signed it is necessary to deposit 10 % of the total price of the purchase (aftermarket) or 30% (on the market of new buildings). Though what the new buildings concerns prepayment and its size depends on the developer and on his inclinations – the rest part of the sum is paid gradually but with one term that the whole sum will be transferred by the time the construction is done. As soon as walls are constructed the remaining payments can be financed by mortgage credit. After the roof is placed your bank is responsible for all the further payments. A notary public will play one of the most important roles here. He is responsible for the fact the contract is done correctly according to the local legislation. When the construction is done, the final contract is signed that says that the Buyer is a new owner of this real estate; it is marked in the National register what confirms that the owner of this real estate is effectively changed. The next step is to transmit all the rest payments towards the Seller. Then the Buyer receives a special certificate claiming that (s)he has property rights. If you used mortgage credit for this contract then you are to wait a couple of weeks till the sum is received. As a rule banks can finance 70% from the price of the constructed object, that allows an investor to spend only 30% of his own assets. The first guarantee of this credit is the mortgage done by the builder, after all the constructed real estate is the mortgage itself.
- Are there local taxes on the real estate in Albania?
- There is no federal tax on real estate. The local tax is paid only in the capital, and it is equal to 20 euro a year. The tax is the same for companies too, except for the commercial companies on the territory of the country.
- Is it necessary to pay VAT when buying real estate or land?
- There are no VAT for the contracts with land and real estate.
-Is it necessary to pay taxes if the piece of land is not used?
- There is no such tax, that allows the interested companies to invest on the longest terms possible.
- Is it necessary to pay profit tax after your own property is sold?
- There is no profit tax for individuals. As far as legal persons are concerned they are to pay 10% from the profit that was received during the bargain. Legal persons and individuals are to pay 3% of stamp tax. Nowadays there are agreements with several countries in order to avoid double taxation (Russia, France, Hungary, Switzerland and others).
- Is it necessary to pay tax on the profit from the rental?
- The rate of the tax is 10% in this case.
- Is there any tax on luxury in Albania?
- Such a tax doesn’t exist in Albania.
- Is there any tax on capital export?
- There is no such tax.
- How much is the tax on inheritance and on the deed of gift?
- There is no inheritance tax in Albania; the size of the gift tax is 3 %. It is better to make up a will as soon as you become the owner of the real estate, it will help to avoid different difficult situation in the future.
- How much is real estate insurance in Albania?
- The price of insurance depends on the price and other parameters of the real estate. For example, if you want to insure a two-room flat, you will pay 100-200 euro a year.