Changes for Croatia’s Real Estate Market

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It remains to be seen how will the latest legislative changes affect the real estate market.

Currently there are approximately 165,000 properties offered for sale in Croatia, including 17,000 properties which entered the market in December. In 2016, the fall in prices of old apartments was stopped and the market began a slow recovery, although the prices of new apartments are still quite low. Tax reform which entered into force on 1 January brought a slight stimulus to the market through the reduction of property transaction tax rate from 5 to 4 percent, but only for people not buying their first home, reports Večernji List on January 4, 2017.

Families which are searching for their first home lost with the tax reform, since the exemption from payment of tax on property transactions for such buyers has been abolished. However, if they buy the property in the second half of the year on loan, the government is expected to subsidize half of their loan instalments for at least four years.

The beginning of the new year brought us some interesting administrative changes as well. Until now, people would have to submit their sales contracts to the Tax Authority themselves, regardless of the fact that their contracts were also submitted to public notaries. If a person would not file for taxes within 30 days, they would pay a penalty. According to the amended law, the obligation to inform the Tax Administration about tax obligation has been moved to public notaries and courts. The government is preparing IT support, but the new reporting system has not yet been implemented, so public notaries still tell people they have to take their contracts to the Tax Authority themselves. For contracts which are not concluded at the public notaries, buyers have to submit a report to the Tax Authority within 30 days.

This is probably the last year in which property owners will pay utility fee, which should next year become a real estate tax. During this year, the Tax Authority and local government bodies will prepare a new model of taxation which will take into account the size, quality and age of the property, and by March 2018 everybody should receive at their home addresses a notice about new amount of their tax liability. The real estate tax should be the same or lower for older properties, and slightly higher for newer apartments and houses.

Price of apartments are growing most rapidly in Split and Zagreb, the two largest cities in Croatia. In Rijeka, there is a slightly slower recovery of the prices, while in Osijek, where you need to pay on average 945 euros per square metre of an apartment, the average price stagnates. President of the Association of Real Estate at the Croatian Chamber of Economy Dubravko Ranilović believes that the reduction in tax rates will have a positive impact on the real estate market, but he does not support the abolition of tax exemptions for first home buyers. He also points out that no one is talking about the need for social housing or about permanent incentives which would enable young families to plan their lives in Croatia.

In December, the greatest demand was for 70-square-metre apartments in Zagreb, which were offered for an average price of 700,000 kuna. Elsewhere, Dubrovnik is still the most expensive town in Croatia, followed by Opatija and Hvar.


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