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No Taxes for Real Estate Transactions in Certain Conditions

Written by: Editor

No Taxes for Real Estate Transactions in Certain ConditionsReal estate properties can be bought in Romania by EU and EAA citizens in the same conditions as the locals. Land can be acquired in Romania only if there is an international agreement which allows Romanian citizens to purchase land in a foreign country. The legislation regarding the property tax in Romania has been recently amended and from February 1st, 2017, no taxes for real estate transactions are withheld, in certain conditions. Our accountants in Romania can give you detailed information about the conditions under which real estate can be purchased without any taxes.  



Taxation of real estate transactions in Romania


Real estate rights and ownership can be transferred based on a sale-purchase agreement. This contract must be authenticated with a public notary and the Real Estate Register. The Tax Code in Romania has been recently modified and no taxes for real estate transactions are applied within specific conditions. Starting with February 2017, natural persons who transfer their property right over real estate must pay a real estate transfer tax of 3% on the taxable income. The taxable income is assessed by deducting the non-taxable amount of 450,000 RON from the value of the transaction.

No tax is due for real estate transactions up to 450,000 RON. The real estate transfer tax is not withheld on companies transferring an ownership right or any other real estate right. A standard VAT rate of 19% is applied to real estate transfers. A lower VAT rate of only 5% applies to a transfer of real estate consisting of construction of dwellings. Please note that the real estate transfer tax is not to be mistaken for the building tax which is annually paid by owners with the local tax authority. Our accounting firm in Romania can provide you with extensive information about real estate and ownership transfer taxes.


Taxation of real estate transactions in special cases



The property legislation in Romania provides special cases when a real estate or ownership rights can be transferred. The real estate transfer tax of 3% is applicable in all situations when the value of the property exceeds 450,000 RON. These cases include the following:

•    Multiple owners – the taxable income is assessed by the total value of the property and is shared equally by the owners;
•    Real estate sale among relatives – there is no exemption of the real estate transfer tax when the selling price is above 450,000 RON. No taxes are paid only when a donation is made between relatives;
•  Legal entities – the real estate transfer tax is not withheld to companies and corporations such as real estate developers. Real estate projects are not considered by the Romanian legislation as part of the personal patrimony;
•    Foreign citizens – they are not exempt from paying the real estate transfer tax when the value of the purchased property exceeds 450,000 RON. Equal treatment is guaranteed to locals and foreigners alike.

Don't hesitate to get in touch with us if you need professional guidance in matters of taxation in Romania.


 

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