Montenegro – a buyer’s guide

Montenegro is currently one of the hottest places to buy. Over the past few years, tourist numbers have increased by 17%, pushing property prices up with some foreign investors seeing up to 30% increases on the values of the properties. As the country is such a good place to buy, here at BuyingForeignProperty.com, we have put together a quick guide to the buying process in Montenegro.

Finding Your Property
Once you have found your perfect Montenegrin property, a pre-contract is signed and a deposit must be paid. We advise that you find a lawyer who speaks Montenegrin and your mother-tongue fluently so that they can advise you through the contract and the buying process. It is also good if they have a good working knowledge of laws in your home country.

Mortgages
Many lenders in Montenegro will lend to foreign property investors however they will require a deposit of between 30-50%. It may be worth investigating if you can get a mortgage from your home country as it may work out cheaper.

Fees and taxes
Once all the searches on the property have been completed, the vendor and buyer will sign a final contact before the public notary. The change of ownership will then be registered with the land registry office. Taxes will need to be paid at this point – there is a purchase tax of 2% on resale properties and a tax of 17% on new builds. The notary and lawyer’s fees will also need to be paid – generally, you should budget about 1% of the property purchase price for these fees. If you have dealt with an estate agent, expect to pay between 4-15% in fees.

The lawyer should be able to advise you on other taxes associated with the property. Some countries have a double taxation treaty which means that you will pay tax in one country and not the other.

Capital gains tax is also applicable – all property sales are treated as income however properties owned for a minimum of three years prior to the sale are exempt from capital gains tax. We advise you budget about 7% for capital gains tax. Inheritance tax and gift tax on property varies between 1-30%.

Foreign nationals who are not residents of Montenegro, or who live temporarily in Montenegro will only be taxed on any income earned in Montenegro – this includes rental income.

Foreign investors who have a permanent home in Montenegro or who spend more than 183 days in the country per calendar year, are classed as residents. These investors are taxed on worldwide income and not just income earned in Montenegro. However, check the double taxation treaty to ensure that you are not paying too much tax.

For most people holding foreign passports who wish to stay in Montenegro for more than 90 days, they must apply to the Ministry of the Interior for a temporary residence permit in good time.

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