Ready to buy, don't know how

[lothelena]

Just looking for where to get started. We actually already live in Zagreb, but rent and are ready to buy something. This will be our first property anywhere and we are clueless as to how it works (here or anywhere).
I am British, my husband is American not sure if that helps or hinders, is there any advantage to being from the EU?

I have heard something about having to apply through the Ministry of Foreign Affairs to buy, but know people who bought first and applied later. Can you apply without risking your money? Get permission to buy something without knowing the exact property?

Any helpful hints greatly appreciated.

[Frederick]

Hi,

it sort of goes like this. The only real problem is stage 3. In reality you will have to pay the full price when you sign the final contact and then hope that you eventually get permission to own (although I've not heard of anyone being refused yet). I also believe that now (4) only needs to go to the ministry of justice which should speed things up. Get yourself a very very very very good lawyer and they will take care of all the necessary paperwork. The I hope it helps.


Time line for purchasing

1) Estate Agent
2) Try to obtain a written survey
3) Pre-contact stage
4) Application to Foreign Ministry Department for permission to purchase
5) Certification of contracts by a notary
6) Submission of documentation to Land Registrar
7) Payment Real Estate Purchase Tax within 30-day deadline
8) Visa Requirements and residency
9) Summary



1) Estate Agent
Find yourself an area you like, then properties you can afford (after allowing for all additional costs - see below). We have produced a property search.
We recommend people not to buy the first property they see and to inspect all suitable properties before making final decisions. Vendors on the Adriatic Coast will probably be more prepared to deal with English purchasers when the main tourist season is over in September, October and November.
Please note that normally in Croatia, even the purchasers pay about 2-3% of the purchase price to agents. (The seller also pays a similar amount.)

2) Try to obtain a written survey (and pay to have it translated if need be)

3) Pre-contact stage
At this stage you are expected to make a down-payment of 10% of the sales price or different if so agreed between the contractual parties. If the vendor pulls out it should be a condition that they pay you 10%

4) Application to Foreign Ministry Department for permission to purchase
When acquiring real estate other than by inheritance U.K. citizens need to obtain the approval of the Ministry of Foreign Affairs of the Republic of Croatia. Prior to reaching a decision the MFA will seek an opinion from the Ministry of Justice, Administration and Local Self - Government, thus the whole process might take a number of months. In Croatia the ultimate proof of ownership is entry of the owners name in the local Land Books (Zemljisne Knjige) on that specific property.

The local courts will not allow a foreign citizen to be entered in the Land Books without the MFA approval. The approval is issued if there is reciprocity, i.e. if Croatian persons can purchase real estate in the country of the purchaser. U.K. citizens may, under condition of reciprocity, acquire real property in Croatia either as inheritance or by other legal transactions such as purchases, deeds, trusts etc. Reciprocity is presumed to exist unless proof to the contrary becomes evident. Inheritance - U.K. citizens may inherit property in Croatia. No additional approvals are necessary.

While such an approval can take up to 12 months, it can easily be avoided if the property is bought by a domestic company, which can be entirely owned and controlled by a foreign person. In that way, the transfer tax on real estate of 5% can also be avoided during each subsequent sale of the property.

Ownership of real property of foreign citizens in Croatia is regulated by Articles 354-358 of the Croatian Property Law (Zakon o vlasnistvu i drugim stvarnim pravima). The law has been published in the Official Gazette No. 91 in 1996 (Narodne Novine 91/96).
According to the Law of property and other real estate rights - Article 356 paragraph 2 (Official Gazette of the Republic of Croatia Nos. 91/96, 68/98, 13 7/99, 22/00 and 73/00), foreign citizens and enterprises, who want to become owners of real estate in the Republic of Croatia need to obtain previous consent from the Minister of Foreign Affairs of the Republic of Croatia. In order to apply for consent, applicants must submit a request written in Croatian, either personally or through an attorney, to the Ministry of Foreign Affairs, Consular Department, Meduli-eva 34, 10000 Zagreb, Croatia. In addition, applicants must enclose the following with the application:
Basis on which the property is acquired (contract of purchasing the property, gift contract etc.), - original or duly legalised copy.
Proof of title (land registry certificate etc.) - original not older than six months; An excerpt from the land books for the particular property (In Croatian ZK izvadak) This document is usually obtained in each municipality (Opcina) at the local municipal court (Opcinski Sud); it's land book division (Gruntovni Odjel)
Certificate issued by authorised authorities for urban planing which proves that the particular real estate is located within the zone in which construction is allowed, according to the zoning plan, - original not older than six months; A document from the local municipality (Opcina), from the following department: "Ured za prostorno planiranje". The document is called "Uvjerenje o namjeni", for the particular property;
Proof of buyer's citizenship (legalized copy of passport, for instance), - original or duly legalised copy; Any photocopies have to be notarized by a Croatian Notary Public
Power of attorney for the attorney - original or duly legalised copy
Copy of each document filed with the request.

The request with accompanying paperwork is to be sent to:

Ministry of Foreign Affairs of the Republic of Croatia
Trg N. S. Zrinskog 7-8
10000 Zagreb
Croatia
Phone [phone]
Fax. [phone]
4920 149
Email: [e-mail]

The applicant shall deliver other necessary documents on request. The fees for the application includes HRK 20.00 application fee pursuant to Article 1 of the Croatian Law on Administrative Fees (Official Gazette of the Republic of Croatia Nos. 8/96, 77/96-Decree, 131/97, 68/98, 66/99-Decree, 145/99-Decree, 30/00-Constitutional Court Decision, 23/02 and 91/02); plus, pursuant to Article 2 of the above mentioned law, HRK 50.00 per applicant for the Decision.

If the fee exceeds HRK 100.00, it shall be payable directly to the national budget of the Republic of Croatia (account No. 100 1005-1863000160, reference No. 24, first adjacent field No. 5002, plus first and last names and address of the applicant, pursuant to Article 13 of the above-mentioned law. If the fee is paid from abroad, according to Article 15 of the above-mentioned law, the payment shall be effected in foreign currency at the mean exchange rate determined by the Central Bank of Croatia.

After the application has been completed and submitted, it shall be referred for regular procedure to the Ministry of Foreign Affairs that shall decide on each application individually.

Pursuant to Article 357 paragraph 2 of the above-mentioned law, the administrative procedure requires previous opinion from the Ministry of Justice of the Republic of Croatia, particularly focusing on the following:

Foreign citizens and enterprises cannot acquire ownership of agricultural land, pursuant to Article 1 paragraph 3 of the Law on Agricultural Land (Official Gazette of the Republic of Croatia Nos. 66/01 and 87/02);
Foreign citizens and enterprises cannot acquire ownership of forests and forest land, pursuant to Article 1 paragraph 32 of the Law on Forests (Official Gazette of the Republic of Croatia Nos. 54/83, 32/87, 47/89, 41/90, 52/90 - final version, 51/91, 61/91, 26/93, 76/93, 29/94, 8/00 and 13/02);
If the object of acquisition is a protected cultural monument, it shall be offered to the authorities first (Republic of Croatia, Municipality, City, County), and only if they decline to exercise their pre-emptive right may the property be offered to foreign citizens and enterprises, pursuant to Article 37 paragraph 1 of the Law on Protecting and Preserving Cultural Monuments (Official Gazette of the Republic of Croatia No. 66/99)
In deciding on each individual application, the Ministry of Foreign Affairs shall determine whether there is reciprocity between the Republic of Croatia and the applicant's state in real property matters. The Ministry of Foreign Affairs collects and examines foreign laws concerning reciprocity with respect to foreign nationals. Interested parties can contact the Ministry of Foreign Affairs for information on reciprocity between the Republic of Croatia and other states. For any additional information regarding reciprocity between the Republic of Croatia and other states please contact the Ministry of Foreign Affairs, Consular Department, (Meduli-eva 34, 10000 Zagreb, Croatia

5) Certification of contracts by a notary
The notary's fees are very low since the notary only certifies the signatures

6) Submission of documentation to Land Registrar where the property is registered at the Court
The estate agent or lawyer requests the registration of the property on behalf of the buyer.

7) Payment Real Estate Purchase Tax within 30-day deadline
A unified tax rate of 5% of purchase price for all types of real estate-based on the price of the real estate in the sales contract and the value estimate by the authorised tax authority in charge for the local area.
It is possible to pay this tax in pounds. The tax is to be paid by bank or post office money transfer. The amount is converted into Kuna at the middle exchange rate by the National bank of Croatia at the day of payment.
The tax is paid after conclusion of the sales contract the customer is obliged to register the purchase at the authorized tax authority within 30 days from the day of conclusion of the contract. Public notaries do also submit one copy of the sales contract to the tax authorities. The customer is obliged to pay respective real estate purchase tax within 15 days from the day of reception of the decision received from the tax authorities on the exact tax amount. If this tax is not paid within this term, interest on arrears is charged for everydayofdelayedpayment.

DOES THE SELLER HAVE TO PAY TAXES WHEN SELLING HIS REAL ESTATE?
No. Only in case the real estate is sold prior to the expiration of three years after it has been purchased and if sold at higher price than originally purchased. In such a case the seller has to pay a 35% income tax on the difference in value of the real estate (purchase and sales price) increased for local taxes, different in every municipality.
You are also exempt if you sell it to your spouse or members of your immediate family.

Income Tax
Croatia has a generally high taxation system, but its tax laws offer unique advantages for persons who receive certain foreign income or a foreign pension. Croatia also offers important tax advantages to yacht owners. As it is not as yet an EU member, Value Added Tax can be avoided if resident in Croatia. VAT of 22% was introduced in 1998 and applies for most goods and services. However, if you do not receive a salary, consultancy fees or similar income in Croatia, the tax situation is very favourable and the following income is tax-free:

[jill]

Good grief Fred, that's detailed!

A reputable agency should see you through all this smoothly without you really being aware, although I don't dispute it's wise to know what is happening. Don't be put off by the seeming complexity and good luck with your purchase.

[mambo]

It seems that the law has been changed recently and you don't need to apply anymore at the ministry of foreign affairs.

Buying real estate by foreign citizens
Hina, June 30
The Croatian Parliament adopted an amendment to the Law on Ownership and Other Proprietary Rights to simplify the procedure of buying real estate by foreign nationals. From now on, the approval from the minister of Foreign Affairs is no longer required. The procedure is expected to be significantly shortened. Also, amendments are now enabling local government units to sell their real estate directly without going through a public tender procedure.

[Madgolfer]

Have a look at our website;

www.inlandcroatia.com

I have sent you a pm and I will be happy to offer any advice or info you need to get started.

[valiant]

after reading all this...is it any wonder that people are building homes "ilegally"??
building a house in croatia is about 100 times harder than buying one and as you can see...buying a house in croatia is like trying to organize a team of multicultural scientists to visit one of plutos moons in a nigerian made rocket.
isnt it reasonable to think that you could go to a croatian lawyer and pay him to deal with the paperwork?