Introduction

Investing in Romanian real estate can be an attractive option for both EU and non-EU citizens due to the country's diverse landscapes, historical charm, and relatively affordable property prices. However, understanding the various taxes and expenses associated with buying property in Romania is crucial to making an informed decision. This guide provides a detailed overview of the taxes, fees, and other expenses you can expect when purchasing property in Romania.

EU Citizens

EU citizens enjoy the same rights as Romanian citizens when it comes to purchasing property. This includes residential, commercial, and agricultural properties.

Non-EU Citizens

Non-EU citizens face more restrictions. They can buy residential and commercial properties but need to form a Romanian legal entity (company) to purchase agricultural land.

Key Taxes and Fees on Buying Property

1. Value Added Tax (VAT)

  • Newly Built Properties: VAT is applicable to new properties and land sold by developers. The standard VAT rate is 19%. However, for residential properties under certain conditions (e.g., the property price is below a certain threshold), a reduced VAT rate of 5% may apply.
  • Resale Properties: Typically, VAT is not applicable to resale properties sold by individuals.

2. Notary Fees

Notary fees are required to authenticate the sale-purchase agreement. The fees are regulated and vary depending on the property’s value:

  • Up to EUR 15,000: approximately 1% of the property value.
  • EUR 15,001 to EUR 30,000: 0.8% of the value + a fixed fee.
  • Over EUR 30,000: 0.5% of the value + a fixed fee.

3. Land Registration Fees

After the sale is authenticated, the property must be registered with the Romanian Land Registry. The fee is typically 0.5% of the property’s value.

4. Real Estate Agent Fees

Real estate agent fees can vary but typically range between 2% to 3% of the property’s purchase price, paid by the buyer, the seller, or both, depending on the agreement.

Legal fees for conducting due diligence, drafting contracts, and providing legal advice can range from 1% to 2% of the property’s value.

Annual Taxes and Maintenance Costs

1. Property Tax

Property tax rates vary by municipality and are based on the type and location of the property. Generally, the rates are:

  • Residential properties: 0.08% to 0.2% of the property's assessed value.
  • Non-residential properties: 0.2% to 1.3% of the property's assessed value.

2. Maintenance Fees

If you purchase an apartment within a condominium, you will need to pay monthly maintenance fees. These cover communal services like cleaning, security, and repairs. The fees vary depending on the property and services provided.

3. Insurance

While not mandatory, it is advisable to insure your property. The cost of property insurance varies based on the property's value, location, and coverage type.

Additional Considerations for Non-EU Citizens

For non-EU citizens looking to purchase agricultural land, setting up a Romanian legal entity is required. This involves additional costs such as:

  • Company Registration Fees: Approximately EUR 300 to EUR 500.
  • Annual Maintenance Costs: Including accounting, legal, and administrative costs, which can range from EUR 1,000 to EUR 2,000 per year.

Financing Options

Foreign buyers can finance their property purchases through Romanian banks, which offer mortgage loans to non-residents under certain conditions. However, the process can be more complex for non-EU citizens, who may face stricter requirements and higher interest rates.

Conclusion

Purchasing property in Romania offers numerous benefits, but it’s essential to be aware of the associated taxes, fees, and legal requirements. Both EU and non-EU citizens need to navigate different regulations and costs, making it crucial to seek professional advice and conduct thorough due diligence. By understanding these factors, you can make a more informed and financially sound investment in Romanian real estate.