faq

What is market value appraisal and why is it needed?

Real estate market value appraisal includes establishing the construction value of the property and verification of property legal status. Verification of legal status is administered by comparing data in owner’s and location documentation with the state in nature which assures both the buyer and the seller that the property is not under encumbrance or mortgage. Although the appraisal of the property is not obligatory, it can add value to the real estate if it is performed on the behalf of the reliable expert.

What is a real estate?

Real estate is a lot of the land surface together with everything permanently connected on surface or underneath it. This means that by buying an apartment we gain ownership over ideal part of the building as well as over the land the building has been built on. In another case, buying land lot we obtain ownership over everything built on it regardless of the registration of the object in the land plans and land registry.

What is land registry?

Land registry records the legal status of the real estate. Land registry is in charge of legal proceedings. Every interested party has the right to access land registry and the possibility to demand for extract.

Which documents are required to buy or sell a property?

Documents needed for buying or selling the property are ownership certificate and copy of land registry. If we are dealing with a lot, it is advisable to present zoning requirements or extracts from location plan which give evidence of the land allocation. It is also advisable to obtain both location permit as well as building permit.

How is selling value/ market value being determined?

Seller determines the selling value of the property, based on market conditions and personal judgment. Tax department determines market value of the property. Establishing the value of the property in case of bank loan realization is performed by an authorized assessor. As a rule he has been chosen by the bank which received the loan application.

Who can buy property in Croatia?

Property in Croatia can be bought by any private or physical legal person.

Can foreign citizens buy property in Croatia?

According to amendments of the Croatian Ownership Law, starting 1st February 2009 all EU citizens can freely purchase real estates in Croatia and register it in their personal names.
The all other foreign citizen must ask for the agreement on the behalf of Croatian Ministry for purchase contract for the purpose of its presentation in order to ask for ownership rights registration. Ministry issues the agreement in question under reciprocity condition.
And some other possibilities are available to foreign citizens.

Who can sell property in Croatia?

Every owner can sell the property. The owner whose ownership has been recorded in land registry can sell property by transferring the ownership to the buyer. Non-registered owner can also sell property but in this case the buyer obtains out-of-record ownership of the property. This situation requires proving legal sequence in order to achieve registration into land registry.

What are the obligations of buyer and seller in real estate market?

The buyer is obliged to pay the entire amount of the agreed purchase price to the seller. The seller is obliged to deliver the property and allow the transfer of ownership on it, and this is granted by tabular

What is tabular statement?

In tabular statement, the seller states that he/she has received the entire agreed amount of the purchase price subsequently allowing the buyer to transfer ownership over the property in the land registry.

What is down payment and what is its amount?

Down payment is the amount of money which proves business earnestness and real intentions on buying the property. Down payment is completely regulated by Law on Obligatory relations.
The down payment amount is a matter of agreement, in accordance with legal maximum. Usually it is 10 – 30% of total agreed purchase price.

How do you notarize a purchase contract?

Exclusively the signature of the seller is being notarized in the purchase contract. In Croatia, the seller notarizes the signature at notary public office. Abroad, the seller notarizes the signature at Croatian diplomatic representations or at notary public office. In the latter case, the contract has to be translated at Official Court interpreter and notification has to be validated at the authorized court.

Who has to pay real estate tax and in what amount?

Real estate tax has to be paid by the buyer at the unique 5% rate of the purchase price i.e. market value of the property as determined by Tax department. Exception to this rule is the situation where the buyer buys his/her first property thus settling the residence issue, according to the changes and amendments to the Law on Real estates taxes

Is it possible to ask for ownership registration before paying the real estate tax?

Yes

What is the final date to file and pay the real estate tax?

Final term to file a tax obligation is 30 days and you have 15 days from issuing your tax decision to pay it. In case of belated payment of the tax, interest will be calculated for each day.

Do signatory parties have to pay any other tax, apart from real estate tax?

If the buyer decides to sell the property in the period shorter than five years from the purchase, for the price higher than he/she paid for it, he/she is obliged to pay 35% on the price difference amount plus the surtax depending on his/her place of residence.

How do you tax rental or lease of the property?

Tax on rental or lease is regulated in Law on Income tax as income from asset or asset rights. Expenditure in the amount of 30% of rental or lease will be acknowledged. According to the Tax department decision, advance payment of the tax is to be paid until the last day of the month for the current month and it totals at 15% of the amount reduced for approved expenditure.

In case of renting the property to the tourists who had paid tourist tax, expenditure will be set at 50% of the gained profit. In this case, advance payment will be calculated and reimbursed by the tax payer upon every rent collection, to the amount of 15% from the sum reduced for approved expenditure.

What is the amount of real estate agency commission?

Agency commission will be paid by the party who asked their services in buying, selling or renting real estate. Commission rate is determined by the real estate agency, and it usually totals at 2% or 3% of the agreed price

Which are relevant laws in real estate business?

Law on succession (NN, 52/71, 47/78)
Law on Marriage and family relations (NN, 51/89, consolidated text, 59/90)
Law on Notary public (NN, 78/93, 29/94)
Law on apartment rental (NN, 91/96)
Law on land registry (NN, 91/96)
Law on ownership and other real property (NN, 91/96)
Law on leasing business location (NN, 91/96)
Law on Obligatory relations (NN, 53/91, 73/91, 3/94, 7/96, 91/96)