Dubrovnik Purchase and Rental Information

The Buying Process in Croatia
The process of buying real estate in Croatia is similar to other European countries. There are two ways that it can be done: either as a private individual or by a Special Purpose Vehicle (SPV) which means setting up a company that will own and operate the real estate. There are advantages and disadvantages of each method depending on the buyer’s tax situation and the use of the property. Generally, an SPV is more suited for buying property that will be included in a rental programme. The use of an SPV also provides several benefits in terms of tax shielding; for example it allows you as the owner to reclaim Value Added Tax (VAT) on the purchase of the property and later enables you to potentially deduct relevant ownership expenses.
Once you have chosen the property that best suits your needs, and decided on whether to purchase as a private individual or through an SPV, the process thereafter is relatively straightforward

Dubrovnik Purchase and Rental Information

Purchase Process Overview
1. Select the property to suiting your needs
2. Review purchasing documents and, if applicable, loan application
3. Setup Special Purpose Vehicle (SPV) company –Croatian company for property ownership
4. Establish agreement with Administration Company for company record keeping
5. Open company bank account and provide start-up capital
6. Execute purchase documents and provide deposit funds –documents to be notarized by Croatian notary
7. Set date for remaining funds disbursement and property acquisition –generally 30 days from contracting date
8. Transfer remaining funds into bank account or obtain loan proceeds from bank to gain possession of residence
9. Register owner’s name, submit unit sale and purchase contract to tax office for Property Tax Assessment
A representative will provide support through each step in the purchase process

Foreign citizens owning a property in Croatia
Citizens of EU member states have the same rights to buy ownership property as Croatian nationals, with the exception of agricultural or protected land for which the restrictions are unchanged.
Non-EU citizens require the approval of the Ministry of Justice in order to legally purchase property in Croatia.

Dubrovnik Purchase and Rental Information

Purchase Currency
All transactions for the purchase of real estate in Croatia must legally be in Croatian currency (Kuna). The prices for the development are however stated in Euros which we believe gives a better comparison.

Mortgage
A special mortgage financing package for qualified buyers is available for this development
Documentation required to purchase property in Croatia
Proof of citizenship is necessary, and this can be in the form of a certificate of citizenship, a passport, or a personal identity card.

Property tax in Croatia
The Republic of Croatia has a unified Real Estate Transfer Tax rate of 5% for all types of real estate and the tax is levied on the value of the property as of 1997. The value of any improvements to the property after 1997 is subject to Value Added Tax.

Value Added Tax
Value Added Tax (VAT) is levied at 23% on the increased value of the property since 1997. This tax is payable on closing but can be recaptured by purchasing the residence through a Special Purpose Vehicle (SPV) company and operating the property as a rental business.

Verifying and Finalising a purchase
The contract must be notarised by a public notary.

Costs associated with owning a property
There is an owner services fee which covers owner services and benefits, maintenance, and equipment replacements. The ownership fee may be offset by rental income generated by on owner’s residence.

Dubrovnik Purchase and Rental Information

Residence Usage and Rental Overview
You as an owner have extensive use of your property. However, the Croatian laws governing ownership in tourist designated coastal areas oblige owners to make their residence ‘available for rent’ when unoccupied.
The Croatian laws governing ownership of residences in tourist designated areas are aimed at maximising occupancy in holiday homes to help the local economy. This is achieved by ensuring that properties are available to tourists for short term rental. You as an owner have unlimited use of your residence for most of the year and are entitled to 35 nights of usage during the peak summer and holiday seasons.

Benefits of renting the property
By renting your residence, you will have the opportunity to generate revenue from your property when you are not using it, which will help to offset the cost of ownership.

Dubrovnik Purchase and Rental Information

Rental Rates
All residences are professionally marketed and operated under licence
Rental rates are set according to the size and location of the residence, and will be seasonally adjusted to maximise rental income. The peak period is from July to mid-September when the resort is operating close to 100% capacity, which coupled with the higher rates generates the highest level of rental income.
The shoulder season months (November to March) are slower; thus, rental income will be significantly lower than the rest of the year.
For the remainder of the year outside the peak season the Resort appeals to a wide range of international tourists and conference clients thus providing you as the owner with continued revenue opportunities year round. Corporate Clients are particularly attracted to the superb Conference and Meeting facilities which houses one of the largest and most sophisticated conference rooms on the Croatian coast.
You as an owner will receive a quarterly statement from the property manager detailing all the rental activity for your residence. The statement will show the amount of rental income. The rental proceeds are then split equally between the property management company and the owner.

Dubrovnik Purchase and Rental Information