How Are Property Purchasing Costs in Montenegro?

In Montenegro, buying a property is not as difficult as some other countries. But of course, there are some rules regarding property sales to foreigners and the rights those foreigners will have.

Both individuals and companies from other countries can make property purchases here. For foreign individuals, it is allowed to buy a house or an apartment in Montenegro. However, individuals themselves cannot buy a land piece. To acquire land, foreigners first need to register a company in the country. Then make the land purchase through this company.

Making the purchase and confirming ownership

When you want to purchase a property in Montenegro, you first contact the seller and negotiate as you would do everywhere else. Then you make a contract between two sides. In Montenegro, the signs on this contract must be authorized by a local court.

After the purchase contract is complete and the signs are authorized, the buyer side will need to pay a tax for the property transfer. The amount of this tax is calculated by the Local Council Offices. They calculate the property transfer tax based on the market value of the property which they will determine.

After the transfer tax is paid, the buyer and the seller can get the purchase contract confirmed. The confirmed contract can be registered to Area Property Registry.

Finally, the buyer makes the payment for the property purchase price that is written in the purchase contract to the seller. And the purchase gets completed with this.

Costs of purchasing a property in Montenegro

As you might have noticed, while making a property purchase, besides the purchasing price, the buyer needs to cover some additional costs as well.

Transfer Tax

The first one of these additional costs is the Transfer Tax that we mentioned earlier. This tax is also known as the Purchase tax.

When a property transfer is going to happen, the sides apply to Local Council Offices for Transfer Tax. Inland Revenue Office determines the market value of the property. And after this agreed valuation, the buyer pays 3% of this value as the Transfer Tax.

Note that; it is the buyer who pays the Transfer Tax.

In Montenegro, all property purchases require this Transfer Tax to be paid, expect purchases of newly built properties. Newly built properties are subject Value Added Tax (VAT) instead.

Value Added Tax (VAT)

When making a purchase for a newly built property, instead of the Transfer Tax, you need to be careful about the Value Added Tax (VAT).

VAT only applies to sales of newly constructed properties. This tax is calculated at 19% of the purchase price. So, as a buyer, you should be sure that the price offers you get are whether include VAT od not.

Notary Fees

As in Montenegro all property transfers/purchases must be registered by a Notary, there will be some additional costs for the services of the Notary office that handles the process.

In Montenegro, notaries get fees for these registers based on a small percentage of the property value. This percentage is around 0.01%.

Note that; it is again the buyer who pays these Notary Fees.

Real Estate Agency Fee

When you find a property to by through a real estate agency, the agency gets a fee for the services they provide as well.

Depending on the value of the property that is being sold, the agency fees can be between 3% and 5% of the property price.

Generally, property sellers pay these Real Estate Agency fees.

Lawyer Fees

Although it is not mandatory, you may want to work with a lawyer when you are making a property purchase to be sure that the property purchase contract is thorough and conditions are safe your benefits.

There is not any fixed or universal fee amount for such a service that you can get by hiring a lawyer. You can get quotes from lawyers and pick the one that you find acceptable. Usually, lawyers can offer you this kind of service for a fee between 300 Euros and 500 Euros. But there are lawyers who can ask for a percentage of the property price as well.

Total Cost of purchasing a property in Montenegro

Overall, considering the additional costs that we mentioned here, the buyer of a property will need to be ready to cover an extra 3.59% of the property price for the additional fees and taxes in total.

However, this 3.59% is only for the transfers of old buildings. For newly constructed properties, because of the VAT, this total additional cost is 19.02% of the property price.