Basis of property acquisition in Montenegro

Updated: May 2023

Montenegro has become the hot spot of the Balkans in terms of investment and property purchase. From beautiful coastal villas, to quite and natural northern houses, the real estate is developing rapidly.

Reasons for property purchase are many, but search for corresponding property begins always with the single step: finding qualified investment advisor that will guide you through entire process efficiently.

There are different properties available on the market. Mostly, foreigners in Montenegro choose to purchase something in the attractive southern, central, or northern region. Among various property types, the most common is the purchase of:

Condos and apartments
Land plots
Villas
Ruins and older town houses

Each property type is differently treated by law and various permissions and additional administrative procedures might be applicable. Thus, the best option is always to have a good investment and property advisor by your side – and ensure that purchase process goes smoothly.

The purchase of ruins and older town houses became popular in the last years, as they are usually hidden in the amazing places all over the country.

Most popular areas to purchase the property are: Tivat and Kotor Bay in the coastal region, Podgorica, and Cetinje in the central region, Kolasin and Zabljak in the northern region. However, depending on the individual preference, there might be other attractive and more suitable locations around the country.

The most common question when it comes to property purchase is the taxation structure of the property transfer process. So, here’s what you need to know about the taxes and procedural requirements:

Real-estate transfer tax is 3% of the overall property value
21% applicable on the first transfer of ownership rights
Notary fees in the approximate amount of 0,01% of the overall property value
Legal assistance and investment advisory fees
Official translator fees
Additional out of pocket expenses might apply
Annual property tax – depends on the size and location of the property – varies from 0,25% to 1%
Tax on rental income is 15%

Foreigners can purchase any property in Montenegro. There is only one specific rule that applies to purchase of the land plots – the land plots can only be purchased by the company.

Property selection and purchase process can be divided in several simple steps:

1. Selection of qualified property and investment advisor

Choosing a qualified advisor with deep market knowledge will save your time and ensure that entire property search, selection and purchase process works smoothly. Usually, the biggest mistake for property buyers is that they choose to do this entire process on their own. It is not impossible of course – but it usually brings a lot of headache and complications.

2. Search, short-listing, background check and selection of property

With the right assistant at your hand, each search process begins with deep search and selection of properties per client’s criteria and requirements. Usually, the short list of preferred properties is created. Since almost all properties in Montenegro have a background of ownership structure and documentations, according to our experience – the due diligence – deep background check is mandatory. We always ensure that our clients know exact history of the preferred properties – and select the property which simply has it all.

3. Confirmation of purchase, sales and purchase agreement and notarization

Once the property is confirmed by the advisor and the buyer, the phase of transferring the ownership starts. This phase stars with simple confirmation of purchase and agreement of terms and conditions. The agreement is signed by both parties – and notarized in accordance with Montenegrin law.

4. Payment of property fee and payment of real estate transfer tax / or VAT

In line with signing the agreement, the payment is done according to agreed schedule.

Payment of VAT comes together with payment of property price. Payment of real estate transfer tax comes after 15 days from the day of contract signature and notarization.

5. Confirmation of transferred ownership and issue of certificate from the Cadastre of properties

Once all prior 4 steps are done – the property ownership is transferred, and certificate of ownership issued by the official State authority for immovable properties – Cadastre of properties.

Depending on property’s complexity, some additional steps might be required, and they vary from case to case.

Investment in property in Montenegro is a smart decision – but requires a proper advisor to guide and support the process! That’s why we are here to assist you in Montenegro!

Author

Bojana Minic

Managing Director | Rufil Consulting Montenegro

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PS: watch this video to find out how our Founder Philipp Rowe built his own house in Kolasin!

UPDATED: May 2023

Understanding latest taxation changes & program ‘‘Europe Now’’