Every purchase of real estate located in a new residential building entails the payment of value-added tax. This tax is known by the abbreviation VAT.
After the realization and placement of the loan, it remains for us to settle the tax obligations that we, as the (future) owner of the real estate, have towards the state.
In addition to the fact that paying VAT is our legal obligation, the Value Added Tax also allows us to register real estate.
Land and other public books are some of the most important documents for you as the owner and are practically proof of the tax paid on the transfer of absolute rights (real estate transfer tax). We wrote about it HERE.
VAT is a very important legal aspect, and most often crucial in the following situations:
- When you buy your first apartment directly from the investor (which is in the VAT system) and which is being sold for the first time;
- When buying your first apartment/house from an individual;
- When you are buying an apartment/house, but you already have a property owned or co-owned.
VAT refund on the purchase of the first apartment
The first real estate is usually considered to be an apartment (either ownership in an apartment or a share in a family apartment building) bought by a person who does not have and has not had property (or ownership share) on “his name” – starting from July 1, 2006.
We wrote about the purchase of the first apartment, and the benefits that accompany the tax refund, in a recent text. We suggest you visit the link we will leave below.
LINK: Purchase of the first apartment with cash benefits and VAT refund
Please note that the law on VAT refunds prescribes benefits for buyers of the first apartment for apartments in new construction.
Read more about what new construction is below.
VAT or Value Added Tax according to the latest amendments to the Law, is 10%.
The agreed price of the apartment with VAT must be paid in full to the seller, at the expense of the investor.
When can you (still) claim a VAT refund, and when is that option missing?
When you buy your first apartment (new building) directly from the investor, you get the opportunity to be exempt from paying taxes on the transfer of absolute rights. You are thus able to claim a VAT refund (which you paid through the sales contract).
Exemption from VAT is also linked to the certain square footage of the apartment. The buyer of the first apartment is exempt from paying VAT for the area of the apartment up to 40m2.
Also, members of the buyer’s family household who have not owned real estate in the territory of the Republic of Serbia since July 1, 2006, are entitled to a VAT refund on an area of 15m2.
For example, if the buyer of the first apartment buys an apartment of 70m2, he is entitled to a VAT refund of 40m2 as the buyer of the first apartment, and the remaining 30 square meters of the apartment can be “shared” by the household members (15m2 per member).
If you buy your first apartment/house from an individual, you may be exempt from paying taxes on the transfer of absolute rights, but you do not have the option to claim a VAT refund.
When you pay VAT when buying a property, you will not pay tax on the transfer of absolute rights, and vice versa.
Another case when you pay VAT when buying a property is if you bought a renovated (used) apartment. If the investor has renovated, adapted, or in any way adapted the apartment to the market, you also pay VAT on real estate transactions.
The construction company Grading is here to make the whole process of arranging an apartment, choosing a location, or selling an apartment easier and simpler.
On our site, you can find out about various things that are necessary for making an informed decision about buying an apartment. Especially when it comes to buying that first warm home.
Do not hesitate to contact us.
