'For an individual the stamp duty or Real Estate Transfer Tax is payable at a rate of five per cent of the property price and is due within 30 days of entry in the Land Registry.
'If you have set up a VAT registered company to buy the property, the five per cent will apply to the whole property price or only to the land value depending on whether the property was built before 1998 or since then. In the latter case, VAT at a rate of 22 per cent is payable on the constructed value but this should already be included in the property price. The VAT is refunded within two months of completion of the property.
'With regard to legal fees, it is important to remember that spending a little extra can save a lot of unnecessary aggravation. The notary’s role is indeed to ensure that the transaction is carried out according to the law however the language barrier and differences between the legal systems in Croatia and in your home country could lead to obvious problems if you do not take the right precautions.
'Selection Property therefore recommends that you use the services of an independent bilingual adviser who is qualified in Croatian law. This can usually be arranged whilst you are in Croatia and your chosen lawyer can then liaise with the notary on your behalf. The fees for a notary and a lawyer usually work out at about 1.5 to 2 per cent of the purchase price.
'As a foreign buyer, you can currently finance a property purchase either by paying ‘cash’ or as an individual through a leasing agreement or by setting up a Croatian registered company and borrowing through a mortgage.
'The concept behind the leasing option is long-term rent i.e. usage of the property during a definite period. During the leasing period, the lender is the registered owner of the real estate but the agreement stipulates that the purchaser can use the property. The latter makes a deposit payment according to the purchase contract and takes out an insurance policy on the property purchased. After the lender has made payment to the seller for the outstanding amount, the buyer can use the property and starts paying the monthly instalments.
'When setting up a company to purchase a property, you should budget for initial costs and annual running costs of about €3,000 (£2,400) each. The maximum loan amount is currently 70 per cent of the purchase price and the standard repayment period is 15 years, up to a maximum of 20 years.' said Robin.
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Amanda Lamb is on her travels finding you the ideal location for your new house
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