Cash Not Welcome When Buying Property in Bulgaria

Summary: The Bulgarian authorities are pushing ahead with positive property market reforms

If buying property in Bulgaria to enjoy the mountains, beaches and beautiful, historic cities is on your mind and you want to pay cash, you’d better act fast!  To discourage a seedier element from buying property in Bulgaria, the government is poised to change the rules on cash purchases.  It’s even prepared to back the measure up with some teeth – in the form of “financial police” that will monitor large purchases within the country.

According to the Sophia Echo, the proposal is just one part of a rather extensive package of changes in regard to financial transactions.  The idea is to fight organised crime and also to stop some of the tax evasion that tends to go along with cash purchases.  With more than 600,000 real estate deals closed in Bulgaria within the last year, tax evasion remains a big concern.  About 85% of transactions included bank transfers but despite this, many did not declare actual prices for tax purposes...this is going to stop and from now on, cash is not welcome when buying property in Bulgaria!

In this article we’ll take a look at the proposed rules change and what it could mean to investors.  Whilst this will no doubt not effect legitimate buyers, it could make Bulgaria look even more attractive to certain investors.  Those who do not want to buy in a country where the “bad guys” have it easy will likely find Bulgaria even more appealing if this measure does go through.

So, what would the change mean for legitimate investors?

Probably not too terribly much.  The law would limit financial transactions in cash to 10,000 leva and under.  This would mean all major purchases would have to be handled via bank transfer, where a paper trail is created.  Split payments would also be disallowed to stop those who might try to circumvent the new system.

The proposal is being met with mixed responses from interested parties within Bulgaria.  The Confederation of Employers and Industrialists in Bulgaria believes the measure would help legitimate businesses.  Whilst the Bulgarian trade-industrial court thinks the limit could interfere with free trade, a majority of its members support the change and many would prefer to see the limit set at 5,000 leva.  On the other hand, the Association of Banks does not support the measure, fearing the expenses involved might outweigh the benefits.  It is supporting more study before the measure goes through.

Buying property in Bulgaria is considered by many to be a very sound investment.  As this market has gone from one that was for risk takers only to one that is considered maturing, the draws of investment here continue to grow.  With value growth in Bulgaria high, European Union membership now sealed and tourism on the rise, this country’s appeal to foreign investors is strong.  The proposed rules change might make it appeal a little less to investors who want to get around the system, but it likely will not impact legitimate buyers very much at all.

Just remember, when buying property in Bulgaria – cash might not be welcomed for much longer!

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