Dont Miss On Claiming The VAT Back On Your Bulgarian Property
May property investors have ventured on buying properties in Bulgaria with a clear business idea in mind. It has been about 80 of the cases that the customers have expressed the intention to use the property for their holidays for a couple of weeks and have it rented for the rest of the time generating some profit.
The idea is absolutely viable. What many people do not realize is that actually what they are auctioning is a legitimate business and properly set up it can generate some significant tax benefits. An area that should be considered by anybody when purchasing a holiday property is the VAT implication.
If you are buying from a developer that in effect is a business entity you are being charged VAT tax. In Bulgarian case it is 20 and is a substantial part of the total price of the purchase. If you buy it in a personal name you are becoming the final consumer in the VAT sequence and as such you are the one who absorbs the VAT. However if we assume that you are going to be using your property to do business with then you by law need to set a company that this business should operate through. If we go further and get your business VAT registered then it is absolutely legitimate that you claim the VAT that you have paid to the developer to acquire the property.
The scheme sounds nice and easy but it also has downsides. Being a VAT registered business any profits that derived from the property is going to be Vatable. In other words the rent that you are going to be receiving will have to include 20 VAT payable to the government. Furthermore the administration of the VAT process requires a professional accountant that deals on a daily basis with your business. For some investors it may be also too late. Once you have transferred the ownership of your property in your name you have already paid the VAT to the government and the VAT claim is not an option anymore.
As per the above it is obvious that the VAT claim is not beneficial for all the Bulgarian property buyers. In many cases especially when the nominal value of the purchase is low then the expenses in claiming the VAT may outstrip the potential gains which make the whole exercise ineffective. However for people who have purchase properties with substantial value and especially those with more than one property it is very advisable to look into the idea closely.
As a conclusion if you are a property investor in Bulgaria do not hesitate and contact your accountant you may be very pleasantly surprised to understand that you can have 20 of the investment back in your pocket.
About the writer:nbsp;nbsp;Real Estate investor author trainer.Helping others profit from the recession at www.BeARealEstateHeavyweight.com
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