Recently, there has been intense discussion about updating the tax assessments of real estate. They have not been changed for nearly 20 years, which leads to a 5 to 8-fold difference between the tax assessment of a given property and its market price, brokers explain.
Yes, the change will have an impact on the property market, but not to a large extent. The reason is that trade is much more affected by other factors such as: bank policy regarding mortgage lending, unemployment rate. In the event that there is a shock increase in tax assessments and taxes, then this would significantly affect the market and the property business as a whole.
Between 20% and 30% is a reasonable increase in tax assessments, according to experts. It is even better not to exceed 20%, because of the social effect. “If you tell a pensioner that you are increasing the tax on his property by 30%, while his pension has increased by 7.8%, this will become a major public problem“ is the opinion of tax consultant Nikolay Ivanchev.
“Increasing property taxes or introducing a new tax is not the most serious factor that can negatively affect the property market“, said Dobromir Ganev, partner at Komfort & Foros Brokers. “In Bulgaria, property taxes are motivational, they do not stop people from buying properties”, he added. According to his calculations, an increase in the total purchase price by about 1% will hardly change the number of transactions – the possible decrease is between 0% and 1%. However, if all costs were added together by about 10%, the impact would already be significant.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be found at imot.bg