Montenegro Property Taxes

Investing in Montenegro’s real estate market offers stunning coastal locations and lucrative opportunities. However, understanding the property tax system is key to making informed decisions and avoiding unexpected costs. Whether you’re a foreign investor or buying a second home, here’s what you need to know about property taxes in Montenegro.

1. Property Transfer Tax Buyers of existing properties must pay a one-time property transfer tax of 3% of the market value. This tax is due within 15 days of signing the final sales contract.

Example: Purchasing a €200,000 property incurs a €6,000 tax. However, newly built properties bought from developers are exempt from this tax and instead subject to Value-Added Tax (VAT).

2. Value-Added Tax (VAT) New properties purchased directly from developers are subject to 21% VAT, which is included in the purchase price.

Example: A new apartment priced at €250,000 includes a €52,500 VAT, making the total cost €302,500. Knowing whether your property is subject to VAT or transfer tax helps you plan your budget.

3. Annual Property Tax Owners pay an annual property tax ranging from 0.25% to 1% of the property’s market value, depending on location and type.

Example: A €300,000 property in Budva with a 0.5% tax rate results in an annual payment of €1,500, usually paid in installments.

4. Capital Gains Tax Selling a property may trigger a 15% capital gains tax on the profit. This is calculated by subtracting the original purchase price and renovation costs from the selling price.

Example: Selling a property bought for €200,000 at €250,000 results in a €50,000 gain, with a tax of €7,500. However, owners who have held the property for over three years as their primary residence may be exempt.

5. Additional Costs to Consider

• Legal Fees: 1%–2% of the property value

• Notary Fees: €300–€500

• Real Estate Agent Commission: 3%–5% of the purchase price

• Rental Income Tax: 9% (certain expenses may be deducted)

Final Thoughts Being aware of Montenegro’s property taxes helps you plan your investment wisely. From the one-time transfer tax to ongoing property taxes, understanding these costs ensures a smooth and successful real estate experience in this breathtaking country.