|Americans can buy Real Estate in Croatia based on Foreign Reciprocity Laws but transaction costs are insanely high. If you are willing to pay a 25% VAT read on.
In Croatia Real estate acquisition by foreign nationals is loaded with restrictions and therefore is extremely slow and frustrating as compared any real estate transaction you may have experienced at home. If you are willing to pay over 30% Transaction Costs on a new property; or, over 15% Transaction Cost on an old property; then consider some of these restrictions:
Consent To Purchase Real Estate must be secured from the Ministry of Foreign Affairs before the sale can close. This consent can take up to 6 months since the Ministry has to study the applicant’s foreign laws to discern if a reciprocity agreement is in place. The Ministry of Foreign Affairs may seek the opinion of the Ministry of Justice, the Ministry of Administration, and Local Municipal Government before granting the consent.
Foreigners cannot acquire agricultural and forest land (I was thinking Vineyards). Foreigners cannot acquire properties considered protected cultural monuments, unless the local authorities waive their premptive right to acquire the property.
Now consider this:
In Croatia there is an very relevant issue concerning clean titles. During the war approximately 1/3 of the Croatian population fled the country. There is a statistical possibility that the Seller may not be the legal owner. Fortunately, the government does not allow purchase of properties with unclear ownership. Unfortunately, you could uncover this fact at this after making a deposit and there is no guarantee you will get your deposit back. If you need a referral of an attorney in Croatia contact me). You want an attorney to determine rightful ownership before you make any deposit or present a contract.
In Croatia the VAT is everywhere: On a new property you pay 25% VAT, plus 25% on your Legal and Agents Fees. If you are a foreigner and plan on renting it part time or airbnb then you must rent through a property management company and you must pay them a 25% VAT.
If you buy an older property there is no VAT but there is a 5% Real Estate Transfer Excise Tax plus all the 25% VAT fees mentioned above on services. If you build you must pay a 25% VAT on all materials.
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