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How Much Are Property Purchasing Costs in Montenegro?

Property Purchasing Costs in Montenegro

Property Purchasing Costs in Montenegro

When it comes to purchasing property in Montenegro, the process is comparatively less challenging than in some other countries. Nonetheless, there are certain regulations concerning property sales to foreigners and the corresponding rights granted to them. Knowing these can be very helpful in both saving time and avoiding unnecessary expenses.

Both individuals and companies from foreign countries are permitted to make property purchases within Montenegro. Foreign individuals are allowed to buy houses or apartments in Montenegro; however, purchasing land is restricted. To acquire land (greater than 500 square meters), foreigners must first establish a company in the country and then proceed with the land purchase through this registered company.

Navigating the Purchase Process and Establishing Ownership

1- The process of buying property in Montenegro entails several steps. First, you need to engage with the seller and negotiate terms, much like you would anywhere else. Subsequently, a contract is drawn up between the two parties, and in Montenegro, the signatures on this contract must be validated by a local court.

2- Once the purchase contract is finalized and the signatures are authenticated, the buyer is required to pay a property transfer tax. The exact amount of this tax is determined by the Local Council Offices, who calculate it based on the market value of the property.

3- With the transfer tax paid, both the buyer and seller can have the purchase contract officially confirmed. This confirmed contract can then be registered with the Area Property Registry. Finally, the buyer completes the transaction by making the payment for the property as stipulated in the purchase contract to the seller.

Breaking Down the Costs of Property Purchase in Montenegro

Beyond the actual purchase price, there are additional costs associated with buying property in Montenegro.

● Transfer Tax

The first among these additional costs is the Property Transfer Tax, also referred to as the Purchase Tax. When a property transfer is in progress, the parties involved apply to the Local Council Offices for the Transfer Tax. The Inland Revenue Office determines the property’s market value, and following this valuation, the buyer pays 3% of this value as the Transfer Tax. It’s important to note that the buyer is responsible for covering this Transfer Tax.

Except for newly built properties, all property purchases in Montenegro require payment of the Transfer Tax. Newly constructed properties are subject to Value Added Tax (VAT) instead.

● Value Added Tax (VAT)

When purchasing a newly built property, it’s crucial to account for Value Added Tax (VAT) instead of the Transfer Tax. VAT only applies to the sale of newly constructed properties and is calculated at a rate of 19% of the purchase price (There are preparations for this to be 21 percent). As a buyer, it’s essential to ensure that the price offers you receive explicitly state whether they include VAT or not.

● Notary Fees

In Montenegro, all property transfers or purchases must be registered by a Notary, which incurs additional costs for the services provided by the Notary office handling the process. Notaries in Montenegro charge fees for these registrations based on a small percentage of the property’s value, approximately around 0.01%. Once again, these Notary Fees are borne by the buyer.

● Real Estate Agency Fee

If you’re utilizing the services of a real estate agency to find a property, they will charge a fee for their services. This agency fee varies between 3% and 5% of the property’s price, depending on the property’s value. Generally, property sellers are responsible for covering these Real Estate Agency fees.

● Legal Counsel Fees

Though not mandatory, it’s advisable to consider engaging a lawyer during the property purchase process to ensure the purchase contract’s thoroughness and the safeguarding of your interests. The cost for such legal services isn’t fixed or universal and can be acquired by soliciting quotes from lawyers. Typically, lawyers offer this service for a fee ranging between 300 Euros and 500 Euros. However, some lawyers might request a percentage of the property price instead.

Total Property Purchase Cost in Montenegro

Taking into account the mentioned additional costs, property buyers in Montenegro should be prepared to allocate an extra 3.59% of the property’s price to cover all additional fees and taxes. It’s important to note that this 3.59% pertains exclusively to the transfer of pre-existing buildings. For newly constructed properties, due to the inclusion of VAT, the total additional cost is 19.02% of the property’s price. ■