Property Purchase Costs in Montenegro

If you are planning to buy real estate in Montenegro as a foreigner, you should also know that there might be additional costs. It's always best to know all costs beforehand. We’ve prepared a list of purchasing expenses.

In general, the buyer pays the expenses of buying property. It is mainly because these costs are mostly required to transfer the title deed, from seller to buyer.

There might be differences in purchasing costs, depending on which kind of real estate you’re buying. For example, there are certain taxes only paid for newly built properties. Or, some fees only must be paid when a property is resale and bought from another seller.

The official currency in Montenegro is the Euro. So, if you are wondering “Can I pay my property purchase expenses with a US dollar?” the answer would be “No”. The costs of buying property in Montenegro can only be paid with Euro currency.

Buying property in Montenegro comes with different costs. Here’s a list of the main ones to help you know what to expect:

• VAT
• Property Transfer Tax
• Income Tax
• Annual Property Tax
• Notary and Translation Fees
• Legal Consultancy and Real Estate Agency Fees

Detailed Explanation of the Costs & Fees

In Montenegro, the main purchasing expenses are;

1. VAT (Value Added Tax)

The VAT is a one-time payment for the first-ever purchase of real estate from the construction company. It is merely required for newly built properties and must be paid only once. The current VAT rate in Montenegro is determined as 21%.

2. Property Transfer Tax

This tax is required for the transfer of the title deed, and for each transfer transaction. It is only applied for resale properties that belonged to another individual before. Buyers who buy a brand new property from a construction company are exempted from this tax.

The property transfer tax rate is now 3% and must be paid within 15 days after signing the sales contract. At the end of the 15-day period, 0.03% interest is applied for each passing day.

3. Income Tax

Income tax is a liability for the seller because of gaining a certain amount of profit from selling the property. The income tax rates in Montenegro vary from 9% to 15%, depending on the taxable amount.

If the title deed transfer is made between the seller and their spouse, parents, or children, the seller is exempted from paying the income tax.

4. Annual Property Tax

The annual property tax in Montenegro is collected from the property owners. As it’s clearly stated in its name, this is a yearly tax paid once a year. The payment is made in two different installments, one in June and the other in October.

The annual property tax rate changes from 0.1% of the property value to 1.0% in general. It depends on the factors that determine the property value, like location or acreage. The maximum tax rate is about 5.5%.

5. Notary and Translation Fees

In Montenegro, the notary conducts the title deed transactions, and the cadastre issues the title deed document. The notary fee is determined by the property value. If the purchase price is €100.000, the notary fee will be €350 + VAT (21%).

If the property value is above €120,000, on every €15,000 increase in the value, an amount of €10 will be added to the notary fee. However, the notary fee can change depending on the work to be done, or additional services such as notary’s escrow. In total, notary fees are up to 0.01% of the property value.

For the sales agreement process in the notary, a sworn translator is obligatory. The sworn translator will be responsible for the translations of both conversations and sales agreement and all paperwork. The expenses of the sworn translator are paid by the buyer. Depending on the work to be done, the cost of a sworn translator is about €200 - €300 in total.

6. Legal Consultancy and Real Estate Agency Fees

While buying real estate abroad, it is highly recommended to work with professional consultants. It would be beneficial to choose an experienced advisor with expertise in real estate sales during the process. In this way, you will be leaving no room for failure that could cost you even more in the future.

In general, real estate and legal consultancy fees are 3% of the sales price in Montenegro.