A 30% luxury tax to be introduced on real estate properties, evaluated as above average

A 30% higher tax will be paid on real estate properties with a tax evaluation above the average, according to amendments to the Local Taxes and Fees Act, to be enforced as of the beginning of 2011, announced the Ministry of Finance. The draft amendment stipulates that municipal councils may set a higher tax on real estate properties and the size of the tax will increase in the range of 0.1 to 4.5 per mille of the real estate’s taxable evaluation. So far, the ceiling for the tax rate was 2.5 per mille. 

According to the Government’s anti-crisis plan approved in the spring, the luxury tax was supposed to be levied on real estate properties worth more than BGN 300,000. The present draft of the Finance Ministry also stipulates that the real estate tax should be paid in two equal installments: the first one - from March 1 by June 30, and the second one - by November 30. So far, the tax could be paid in four equal installments.

Vessela Ilieva, CEO of Unique Estates, commented to Klassa that clients would think twice before they decide to buy an expensive property since the expenses on it increase all the time. According to her, the luxury tax would set additional difficulties to the sector rather than help it as an anti-crisis measure. Moreover, the money will enter wealthy municipalities alone, such as Sofia, Plovdiv and Varna.

Text and photo: klassa.bg

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