Useful tips for buying real estate
Buying guide
Your property viewing trip to Montenegro – Meet the APIM Team, create portfolio and view properties
- Email the APIM team at sales@aplaceinmontenegro.com or call +382 67 635 107 if you require assistance with arranging your property viewing trip to Montenegro;
- Advise our agents of your property requirements – let us know the type, size, features, amenities you are looking for from a property for purchase in Montenegro, as well as your prefered location and budget;
- We will create a portfolio for you to match your desires and an itinerary for the viewing trip;
- Property viewing trip is an important and enjoyable part of the purchase process, where you will have an opportunity to get a feel of the properties in person, look beyond the photos and plans on paper, and taste Montenegrin lifestyle;
Negotiate the purchase price and conditions
- Once you find a property that matches your requirements, negotiate the price and purchase conditions with the seller, with our assistance.
Sign the reservation agreement and leave a deposit to reserve the property
- When price and purchase conditions are agreed, the buyer usually signs a standard reservation agreement and places a deposit (usually €3.000 – €10,000) to take the property off the market, so make sure you being the funds with you to allow you to place a reservation deposit;
- This deposit makes part of the agreed property purchase price
Lawyer and power of attorney
- We strongly recommend that you appoint a lawyer licenced in Montenegro to act on your behalf during the property purchase process. We can provide you with the list of lawyers with whom our clients have worked sucessfully in the past, and who are independent from our agency.
Property paperwork
- Your lawyer’s duty is to carry out a detailed check of the documents relating to the property you wish to purchase and ensure the property is ready for sale from the legal perspective.
Sign the sales and purchase contract
- Once your lawyer and the seller finalize the Sales and Purchase Contract, obtain your approval and have it translated into your prefered language, the contract is then signed either by the buyer personally or by the lawyer you appoint. Each contract must be signed and verified at an office of the Notary licenced in Montenegro. We can provide you with the costs of Notary services if needed.
Registering you as the new owner at the cadastre office
- Once the Sales and purchase contract is signed, and the full price of the property is paid, the seller provides the client with a document (locally called clausule intabulandi), which gives the right to register the client as the new owner of the property;
- Your lawyer will follow this processthrough until you receive title deeds in your name.
Financing your property
- Housing loans for non-residents in Montenegro is available through a number of Montenegrin banks.
- The loan amount available to non-resident clients ranges from €5,000 to €400,000 with maturity of 3 to 300 months. Please contact us for further details.
Temporary residence for foreigners based on property ownership in Montenegro
- A foreigner who owns property in Montenegro can obtain a temporary Montenegrin residential permit, provided that the property in question is an apartment, house, condo, hotel or a restaurant;
- There are no limitations in relation to the value or size of the property;
- The permit is issued for a period of one year and can be further extended;
- This type of residential permit does notgive a foreigner the right to work in Montenegro;
- Please contact us for further details and information on supporting documentation.
Purchase costs
Reservation deposit
- Usually €3,000 – €10,000;
- This deposit makes part of the agreed property purchase price.
Lawyer fees
- Approximately €1,000 for a purchase of mid-size apartment;
- Please make sure you agree lawyer’s fees before appointment.
Power of attorney
- Approximately €50 to €120 including the translation.
Notary fee for the verification of the sales and purchase contract
- 0,00 – 5.000,00 = 70 €
5.001,00 – 20.000,00 = 120 €
20.001,00 – 40.000,00 = 170 €
40.001,00 – 60.000,00 = 250 €
60.001,00 – 80.000,00 = 300€
80.001,00 – 120.000,00 = 350€ - For the property valued above €120,000 for each increase of property price of €15,000 the fee is increased by €10;
- The maximum Notary fee chargeable for the verification of the Sales and Purchase Contract is €5,000.
Translation of the power of attorney and contract
- Translation of these documents must be done by a certified court translator. The average price per page is approximately €20, depending on the number of characters per page;
- A standard agreement is usually written on 5 pages;
- Any additional changes to the contract requested by buyers, are also chargeable;
- Usually translation costs in total come up to approximately €100-€200.
Bank charges for the money transfer
- Bank charges for the money transfer to Montenegro varry from one bank to another, and we encourage buyers to explore various options to see which fits them best.
Cadastre taxes and expenses
- Cadastre taxes are €15 on average
Real estate transfer tax (RETT)
- The Real Estate Transfer Tax for the purchase of a resale property is set at 3% of the value of the property and this is payable by the buyer;
- The value of the property is determined by the Local Municipality Tax Authority and usually matches the price listed in the Sales and Purchase Contract;
- This payment must be made within 15 days form the signing of the Sales and Purchase Contract;
- Where the client is purchasing a property which has not been sold before, from a Developer who is a VAT paying legal entity, the client will be exempt from RETT on the full sales price and RETT is calculated on the portion of the land which the client is purchasing. Your lawyer will make sure that this is stated in your contract.
Annual real estate tax
- The annual real estate tax rate can range from 0.1% to 1.00% of the real estate market value. The real estate market value is determined by the authorized taxation body of a Local Municipality and payable annually. The percentage is determined according to property specifications, age and location.
Residency in Montenegro
In accordance with the Law on Foreigners applicable as of April 2015, the Government of Montenegro, in November 2015, adopted a Decree in regards to determining the type and value of real estate owned by a foreigner.
According to the above-mentioned Law and Decree, a foreigner who owns real estate on the territory of Montenegro is able to obtain a temporary Montenegrin residential permit, provided that the property in question is an apartment, house, condo, hotel or a restaurant. There are no limitations in relation to the value or size of the property.
Ownership of a plot of land, ruin or non-residential building would not qualify for the temporary residential permit.
Obtaining a residential permit allows foreigners to also become tax residents of Montenegro with the condition that they spend 183 days in a calendar year in Montenegro, and to enjoy one of the most favourable tax regimes in Europe, with 9% personal income tax rate and 9% corporate tax regime.
The documents required as supporting documentation to an application for a temporary residency include:
- Title Deeds (Certificate of ownership of the immovable property, issued by Cadastre office and not older than 6 months)
- Proof of sufficient funds for financing the basic needs of the applicant at a level of EUR10 per day (i.e. a bank statement testifying that there is at least EUR 3,650 on the account, or a guarantee of a local resident or business to cover the costs of a foreigner during their stay)
- Proof of mandatory health insurance issued by a local insurance company, with a minimum term of 40 days
- Copy of passport (passport has to be valid for the full duration of the granted residency)
- Statement of Clear Criminal Record issued by the relevant institution in the country of origin, translated into the language of Montenegro (not older than 6 months)
In addition, the foreigner will need to register their arrival with the local police branch or with the closest tourist organization office (Turistička organizacija), within 24 hrs of their arrival in Montenegro, in order to receive the permit.
The residential permit based on ownership of the real estate shall be issued for a period of one year and can be further extended.
This type of residential permit does not give a foreigner the right to work in Montenegro.
Housing loans for Foreigners
A number of Montenegrin banks have recognized the need to offer housing loans to foreigners purchasing a property in Montenegro.
We looked into their offers and listed the basic info below:
- Erste Bank Montenegro
- Loan amount: €10,000 to €400,000
- Payment period: up to 240 months
- Nominal interest rate: from 8.50%
- For further details click here
- Lovćen Bank
- Loan amount: €10,000 to €200,000
- Payment period: 3 to 120 months
- Nominal interest rate: from 4.95%
- For further details click here
- First Bank
- Loan amount: €5000 to €100,000
- Payment period: 36 to 300 months
- Nominal interest rate: 7.99% with a 12 month grace period
- For further details click here
- Crnogorska Komercijalna Banka
- Loan amount: €5,000t to €150,000
- Payment period: 12 to 300 months
- Nominal interest rate: 6.99%
- For further details click here
Taxes
Real Estate Transfer Tax is set at 3% of the value of the property and this is payable by the buyer. Once the Purchase and Sales Contract is signed, the buyer is obliged to make a payment of the RETT within 15 days form the signing of the contract.
If the buyer is purchasing a property from a Developer who is a VAT paying legal entity, the client will be exempt from RETT however the RETT is calculated on the portion of the land which the client is purchasing. Your lawyer will make sure that this is stated in your contract.
The Tax on rental income from a registered rental property is 7%.
Annual real estate property tax rates are from 0.25% to 1%.
Capital gains are taxable at a rate of 9%. For companies Capital Gains tax may be offset only against capital losses. Tax losses (including capital losses) may be carried forward for five years.
Resident individuals are taxed on worldwide income; non-residents are taxed only on Montenegro-source income. An individual is resident if he/she is in Montenegro for 183 days or more in a calendar year. A company that is registered in Montenegro or that has its management and control here is deemed to be resident for tax purposes.
Taxable is the income from employment, business and professional income, investment income (dividends, interest and royalties) and income from immovable property. For companies taxable income is based on accounting profit.
Inheritance/estate tax – A 3% tax is levied on the inheritance of real estate. An exemption is available for the transfer of property as a gift or inheritance to children, parents or a spouse.