Taxes when selling a property: when you owe tax and when you don’t

When you decide to sell a property, the first question is usually the price. The second one, which often comes too late, is: will I owe tax on the money from the sale? The answer depends on a few specific conditions in Bulgaria's Personal Income Tax Act (ЗДДФЛ) - how long you've owned the property, how many properties you sell during the year, and how you acquired it. In this article we explain the rules clearly and with an example, so you know in advance what to expect, not after signing the notary deed.

When you don't owe tax

Under Article 13 of the Personal Income Tax Act, income from a sale is not taxed in three main cases:

- **One residential property owned for more than 3 years.** If during the year you sell one apartment or house and more than three years have passed from the date of acquisition to the date of sale, you owe no tax. - **Up to two properties of any kind owned for more than 5 years.** When you sell up to two properties (residential or not - for example a garage, office, or plot) and more than five years have passed since you acquired them, the income is also tax-free. Agricultural land and forests are exempt after this period regardless of how many you sell. - **Property received by inheritance or bequest**, as well as restituted property - here the income is tax-free no matter how long you've owned it.

An important detail: the periods are counted from the date of acquisition to the date of sale, not by calendar year. If you bought the apartment on 15 November 2023, the sale only becomes tax-free after 15 November 2026 - a transaction a few weeks earlier could cost you thousands of euro in tax.

When you owe tax and how much

If none of the conditions above is met - for example, you're selling an apartment bought less than three years ago, or selling a second residential property in the same year that you've owned for less than five years - the income is taxable.

The tax is calculated like this (Article 33 of the Personal Income Tax Act): the price you acquired the property for is subtracted from the sale price, and 10% statutory expenses are deducted from the difference. A 10% tax is paid on the remainder.

Example: you bought an apartment in 2024 for €150,000 and sell it in 2026 for €180,000. - Difference: €180,000 - €150,000 = €30,000 - Minus 10% statutory expenses: €30,000 - €3,000 = €27,000 - 10% tax: €2,700

In practice the effective burden is about 9% of the profit, not of the property's full price. If you sell at a loss or at the same price, no tax is due. You can check whether you owe tax, and how much, with our sale tax calculator - it also shows the date from which the sale becomes tax-free.

The gifted-property trap

If you received the property as a gift (for example from a parent) and sell it before the exemption periods run out, the law treats the acquisition price as zero. That means the taxable income is calculated on almost the entire sale price - for a €180,000 sale the tax would be around €16,200. The difference between a gift and an inheritance is huge here: inherited property is tax-free at any time, while gifted property is only tax-free once the three- or five-year periods have passed. If you're considering selling a gifted property, check the date on the notary deed before committing to a buyer.

How and when to declare it

Taxable income from a property sale is declared in the annual tax return under Article 50 of the Personal Income Tax Act, filed between 10 January and 30 April of the following year. The tax is also paid within the same deadline - by 30 April. For a sale made in 2026, the deadline is 30 April 2027. Keep your notary deeds - for both the purchase and the sale - because they are what proves your acquisition price. Without a documented acquisition price, the law again treats that price as zero.

What else to know as a seller

- **The local transfer tax** (charged by Sofia Municipality on the property's value) is by law paid by the buyer, unless the parties agree otherwise (Article 45 of the Local Taxes and Fees Act). Spell this out in the preliminary contract so there are no surprises at the notary. - **The building tax** for the year you sell is split: the buyer owes it from the start of the month following the sale, unless you as the seller have already paid it. It's worth checking with the municipality in advance that you have no unpaid local taxes or fees on the property, because the notary will check this at the transaction. - **Early mortgage repayment.** If the property is mortgaged, check your bank contract for an early repayment fee and how long it takes to remove the mortgage.

Conclusion

The tax on selling a property is zero in many cases - but only if the conditions are met exactly, to the day. The same transaction can be tax-free or cost several thousand euro depending on the signing date and on how you acquired the property. This article sets out the general rules for Bulgarian tax residents and does not replace individual advice from an accountant, especially if you live abroad or are selling several properties. If you're considering selling a property in Sofia, contact us at 0879 826 292 - we'll review your documents and tell you honestly when the right moment for the transaction is. We work with a limited number of clients per month so we can give each one the attention they need.