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What restictions exist
on Foreign Ownership? |
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Currently, foreigners
may directly own buildings but they may not directly own
land. However,
it is an accepted and common practice on the Romanian real
estate market for foreigners to own land
indirectly through legal entities incorporated in Romania, even if such entities
are wholly owned by a foreign entity or individual.
All acquisitions of real property must be registered in the
real estate registry (Land Registry) Registration of a change
in ownership normally takes at least one week.
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What costs
do I incur during the property purchase? |
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A stamp
duty, including
a fixed amount and percentage calculated on the value of the
real property ranging from 0.5% to 3% (subject to 50% discount
for transfers of undeveloped land), must be paid for notarisation
of sale-purchase contracts involving real estate.
Mortgages and transfers of real property must be certified
by a notary.
The fee is negotiable but normally ranges from 0.5% to 1.5%.
Payments of commissions and fees for services performed
in Romania (e.g. consultancy and management services) are
subject to a withholding tax of 15% irrespective of the location
where they are performed.
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What income
tax do I pay on rental income? |
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If the landlord is an
individual, the net rental income for buildings (i.e. after
a deemed expenses deduction of 25%) is subject to individual
income tax at a flat rate of 16% (rate as of 1 January 2005).
If the landlord is a company, the net rental income is taxed
at 16% profit tax (rate as of 1 January 2005).Expenses
incurred for deriving rental income are tax deductible.
In their Articles of Association companies should have “rental
activity”listed as their object of business in order to
be allowed to let real estate property.
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What property
tax do I pay? |
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Owners of buildings and special constructions
are subject to building tax, irrespective of their location or
function. For individuals, 0.2% is applicable on the value of
buildings located in urban areas, and 0.1% elsewhere.For companies,
building tax ranges between 0.5% and 1% of the accounting value.
This percentage is increased to between 5% and 10% if the building
has not been revaluated in the last three years.
Owners of land are subject to land tax which is established
at a fixed amount per square metre, depending on location.
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What capital
gains tax do I incur on sale? |
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Sale of property may also necessitate
the payment of capital gains tax of 16% or 10% if the property
is owned for at least two years. The buyer as owner of property
is subject to property tax (0.5% to 1%of the book value of
the building).
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