Purchase a Property in Slovenia
Purchase a Property in SloveniaUpdated on Friday 15th May 2020
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Once you choose the appropriate property, decide for its purchase and make all the arrangements for the price, you shall start the administrative buying process. One of the ways of purchasing a property in Slovenia is by completing the procedure through a public notary; at the same time, locals and foreigners can address this matter by hiring a local real estate agent.
The procedure is completed by signing a purchase contract, which should be signed in the form of a notarial deed. It is necessary to know that the Slovenian notary has the legal responsibility regarding the provisions included in the contract, which has to be drafted following the applicable legislation in the field.
An important aspect that should be mentioned is that, when the purchase contract is signed, the buyer must also receive an extract of the land for the purchased property. The document will provide legal information regarding the ownership of the property. Our team of Slovenian lawyers can assist natural persons with further in-depth information regarding the requirements that have to be respected when drafting a contract on the purchase of property in Slovenia.
What is the process of buying a property in Slovenia?
Persons interested in purchasing a property in Slovenia have to complete the purchasing procedure following specific steps, that need to be performed in a certain manner. Our team of lawyers in Slovenia can advise on the procedures that are involved in this case and may offer legal representation and counselling concerning the following:
- the seller is legally required to provide an actual land registry extract;
- in the situation in which the property is purchased in Slovenia through a bank mortgage, it is necessary to obtain from the bank that has approved the mortgage a declaration concerning the allowance of the respective credit/a deletion of mortgage at the moment when the debt is repaid;
- the notary public writes the contract, but it is strongly recommended to have the respective contract drafted by a specialized lawyer, a procedure which can be completed by our law firm in Slovenia;
- both parties, represented by the seller and the buyer, sign the contract, and after signing the contract, the seller delivers a deposit;
- the seller must register with the competent tax authorities by filling an application for assessment of 2% tax on real estate sales within 15 days and must pay the tax within 30 days;
- when the Tax Administration confirms the payment of the tax, the seller has to provide a copy of the document to the Slovenian notary who is in charge with the property transaction;
- after the notary has obtained this document, the buyer may pay the rest of the price of the property transaction.
The next procedure that is involved in this case refers to the obligations of the buyer; thus, the new owner of the property has to submit an application regarding the ownership of the property with the Land Registry. This is done in order to complete the ownership transfer of the real estate property. Further on, the buyer can sign new utilities contracts (for the supply of gas, water, electricity, internet and so on). Our team of Slovenian lawyers can provide more details on other similar aspects.
As presented above, the procedure of purchasing a Slovenian property implies the payment of certain taxes; such tax obligations are available for both the seller and the buyer, but it is necessary to know that the buyer may be exempt from paying specific taxes. However, the seller is required to pay a tax representing 2% of the value of the selling price of the respective property. The seller must also pay taxes on capital gains, when he or she is not eligible for exemption.
What are the taxes for purchasing a property in Slovenia?
In the procedure of purchasing a property in Slovenia categorized as new construction, the buyer must pay the value added tax calculated in accordance to the purchase price. The tax rate is 8.5% for apartments in that have a size of up to 120 meters square and houses up to 250 meters square; the tax increases at a rate of 20% for larger flats and houses.
After purchasing the property in Slovenia, the buyer becomes liable for the payment of certain taxes; thus, the person will need to pay the tax on property and the compensation for the use of building land (NUSZ). The payment of the property tax is required for a wide category of property owners and it is applicable for the ownership of buildings, parts of buildings, houses, apartments, garages or dwellings. The value of the tax can be reduced in specific situations – related to the size of the real estate property, for persons who register as permanent residents in Slovenia.
As a general rule, it is necessary to know that besides the transfer tax and the VAT, the property transaction includes other types of taxes; for example, it is necessary to pay a registration fee, a tax that is applicable to both the seller and buyer, and which is imposed at a rate of 0.01% - 0.5% from the value of the property.
The buyer has to pay the notary fees, which are commonly imposed at a rate of 0.01% to 0.4% and if the procedure is intermediated by a real estate agent, additional fees have to be paid; the fee of the real estate agent varies between 1% to 2%. It is necessary to know that this fee is imposed to both the seller and buyer.
What categories of foreigners can purchase a property in Slovenia?
Slovenia is a member state of the European Union (EU) and thus, follows the directives prescribed at the level of the Community; this is also applicable to the real estate sector. The country became a member state starting with 2004, which provided EU citizens the right to purchase properties here without any types of restrictions. In the case of foreigners outside the EU, the following regulations will apply:
- persons who are citizens of countries that are part of the European Economic Area Agreement can purchase properties in Slovenia without any restrictions;
- the citizens of the United States of America can also purchase properties here, under the provisions of the Treaty on Trade and Navigation;
- Swiss citizens are allowed to purchase real estate properties, but only as long as they are the holders of a permit issued by the Slovenian authorities;
- in the case of foreigners who are citizens of the EU candidate countries, it is necessary to obtain an approval from the Ministry of Justice in Slovenia, prior to starting the purchase procedure;
- other nationalities, besides the ones mentioned above, may purchase properties here in specific situations – such as through opening a business in Slovenia, through inheritance or marriage.
Foreigners must be aware of the fact that in the case of certain countries, Slovenia applies the principle of reciprocity. This means that a citizen of a certain country may purchase a property here only as long as the legislation in his or her home country grants the right for Slovenian citizens to purchase a real estate property there (this is applicable for countries such as Montenegro, Albania or Macedonia).
What does a sale contract contain in Slovenia?
In order to conclude a property sale in Slovenia, it is necessary to draft a suitable sale contract, following the provisions of the law. A proper contract has to include information regarding the rights and the obligations of the seller and the buyer, the value of the property and the procedures for completing the financial transaction. At the same time, the contract must contain information regarding the mortgage, if this is applicable.
Why is needed real estate due diligence in Slovenia?
Decisions to long term success in real estate transactions needs a solid base and, as a complement to real estate evaluations in legal, tax and financial fields, a real estate transaction usually requires elaborate technical expertise by real estate due diligence in Slovenia.
Depending on customer requirements, by real estate due diligence in Slovenia the experts can specialized analysis in several steps, for example by preparing an overview of real estate, real estate expertise and specialized expertise of the building.
Increasing complexity of the investment objectives and high demands of customers in terms of variability require an expert advice and by real estate due diligence in Slovenia, the real estate investor can benefit from technical expertise before buying, taking into account important criteria such as state building, facilities, functionality, flexibility, reliability and maintenance costs.
What includes due diligence in Slovenia?
Real estate due diligence in Slovenia consists in detailed information and advice on legal status of the property, commercial contracts and rental status on the building, regime in the Land Register and the legal history, tax regime and historical role, insurance regime and damage history, regime of access roads, utility infrastructure system, installed capacity and consumption. An expert evaluation of the good by due diligence in Slovenia also includes the special conditions applicable for tax and property regime.
In real estate due diligence services in Slovenia is also included the preparation of reports in order to summarize the legal, commercial, financial and tax statuses of the real estate good, needed to successfully conclude a contract. Further services should include taking an inheritance, establishment of the estate, identifying other heirs, takeover of a company and conclusion of a transaction.
The purpose of due diligence is to provide recommendations to enter into a transaction in the most beneficial manner or to avoid a disadvantageous transaction. Real estate due diligence in Slovenia also covers the field of finding solutions for owners in dispute with real estate developers.
After Slovenia became a member of the European Union back in 2004, citizens of EU were given the right to freely buy properties in Slovenia without encountering any restrictions. However, there are special procedures to follow when buying agricultural land, for example. Our team of Slovenian lawyers have the necessary legal expertise in the real estate sector and can assist foreigners in the process of purchasing a property in this country.
Law of reciprocity applies in Slovenia
Since February 2013, foreigners were able to buy properties in Slovenia on a reciprocal basis, following the reciprocity principle verified by the Ministry of Justice, based on the Law of Reciprocity. A non-EU citizen who wants to buy a property in Slovenia needs to apply for the establishment of reciprocity to the Ministry of Justice, with a series of documents.
Some of the most important documents are the following: a notarized copy of the passport, a statement of the purpose of purchasing the respective property and a document that contains details of the property, issued by the Surveying and Mapping Authority In addition, an administrative fee is charged.
What are the regulations for foreigners purchasing Slovenian properties?
In order to purchase a property in Slovenia, foreigners must provide the same types of documents and conclude all the procedures that are involved in the process itself. However, the right of purchasing a property in Slovenia is also influenced by the nationality of the foreigners, who must respect additional requirements based on this matter. Our team of Slovenian lawyers can assist with advice on the legislation on the matter, but foreigners should know the following:
- persons who are citizens of the European Union (EU) may purchase properties in Slovenia following the same regulations that are available for Slovenian citizens;
- in the case of foreigners from Norway, Liechtenstein and Iceland, the purchase procedure is done in accordance with the stipulations of the European Economic Area Agreement, which means that they will benefit from no restrictions regarding this legal matter;
- the citizens of the United States of America can also purchase properties here without restrictions, as prescribed by the provisions of the Treaty on Trade and Navigation;
- in the situation of those who are citizens of countries that are candidates for becoming members of the EU, they must request for permission to purchase properties in Slovenia from the Ministry of Justice;
- citizens of countries that are not included in any of the above categories may purchase a Slovenian property if they have started a business here, if they are married to a Slovenian citizen or if they have obtained a property through inheritance (however, even in this case, the reciprocity principle has to apply).
Hiring a real estate agent in Slovenia, a mandatory procedure
Once a real estate agent has been hired, the agent will be in charge of contacting the seller and present the buyer’s offer. At the moment when the offer is accepted by the buyer, the next step is to draft the sale-purchase contract. it is important to know that there is a 10 percentage deposit that needs to be created upon signing.
Title search in Slovenia
When buying a property, it will also be necessary to perform a title search. As the Land Registry has a modernized system and the Slovenian due diligence is performed rapidly, this step can take up to two working days. It can be made directly by the buyer or with the real estate agent’s help. However, the buyer has to translate all the documents in order to avoid future problems.
The final step is made by the Slovenian real estate agent
The final step of buying a property in Slovenia lies in the attributions of the real estate agent that needs to prepare a copy of the land registry entry, a community confirmation proving that no communal rights have been claimed against the property and an official evaluation in order to correctly pay the taxes. After all the documents have been gathered, the buyer needs to make the final payment to the seller. The whole procedure of buying a property in Slovenia can take between 95 days and 124 days.
What does a property contract contains in Slovenia?
As mentioned earlier, the sale of a property in Slovenia has to be concluded through a sale contract. It is advisable to receive legal assistance from our team of lawyers in Slovenia regarding the provisions of the contract, as it must contain a set of compulsory information, such as:
- details regarding the seller and information concerning the real estate property;
- the value that must be paid on the respective property;
- the method through which the buyer will pay the amount mentioned in the contract;
- information concerning any mortgages related to the property available for sale.
What types of properties are in demand in Slovenia?
There several categories of preferred properties searched by foreigners. As a general rule, foreigners prefer to purchase houses with 3 or 4 bedrooms, located in the mountain region and which have a small yard. Foreigners wishing to purchase a real estate property here generally look for offers which have an average price of EUR 300,000.
Some of the most popular destinations where foreigners prefer to purchase Slovenian real estate properties are Ljubljana, Bled, Primorska or Soca Valley. In the case of those purchasing properties in the country’s capital city, most of the requests addressed by foreigners aim at properties located in the city’s center and which have a surface of maximum 100 square meters.
For more details regarding the procedure of purchasing a property, you may contact our attorneys in Slovenia. Our law firm in Slovenia has the necessary legal expertise to represent both local and foreign parties that want to buy a local property; our lawyers can provide an in-depth presentation on the legislation in the field, as well as legal advice on any matter concerning the ownership of real estate in this country.