Sale of real property

If you are selling a property, prepare an extract from the land registry department of the municipal court competent for the area in which the property is located, as well as documents proving that the construction work was built legally, and the energy certificate

The extract comprises three parts:

• property register (sheet A), in which the property, i.e. its main features are registered - plot number, land registry file number, surface area, address, manner of use, plot development level, etc.
• proprietorship register (sheet B), in which the ownership (title) is registered, i.e. information on the property owner, any changes with regard to the ownership, and any restrictions as may personally be imposed on the owner as to their powers to manage or dispose freely of the registered land unit such as, for example, minority, guardianship, extension of parental rights, declaration of bankruptcy
• charges register (sheet C), which shows whether the property is encumbered with any third party rights such as: mortgage, buy back, pre-emption, rent or lease, buyout, registration of enforcement proceedings, ban on alienation and encumbrance, etc.

As the property owner, you are also required to obtain the energy certificate and show it to potential buyers.

Purchase and sale pre-agreement and agreement

It is customary to sign a preliminary agreement that defines the property by indicating the land registry data on the property (cadastral municipality, plot number, and the land registry file number under which the property is registered) and describing the property (for an apartment, this means the address, floor, apartment number, description of its rooms and total surface area), and also specifies the agreed price, the date of concluding the final agreement, and the amount of the down-payment (earnest money).

The down-payment is agreed as a cancellation fee - if the buyer withdraws from the agreement, the down-payment is retained by the seller, and if the seller withdraws, he must pay the buyer twice the amount of the down-payment. The usual amount is ten percent of the property’s value.

In addition to everything listed in the preliminary agreement, a purchase and sale agreement usually includes the date of handover of the property into the possession of the buyer, as well as the seller’s guarantee that the property is not encumbered by any third party rights. Provisions on purchase and sale agreements are prescribed in Articles 376-473 of the Civil Obligations Act:

Civil Obligations Act.

After the buyer has paid the full amount from the agreement, you are required to issue a tabular statement certified by a notary public, with which the buyer can register his/her right of ownership (title) over the property.

You are also required to hand over the energy certificate or a copy thereof to the buyer.

Tax liability

The real estate transfer tax is reported and paid by the buyer; as the seller, you may be subject to paying the real estate income tax based on alienating the property if you sold, donated, exchanged or otherwise transferred the acquired or donated property to another person within three years from its acquisition.

You are exempted from this tax provided that:

• the property was used for your own housing, as well as for housing dependent members of your immediate family
• the alienation was performed between spouses and relatives in the first line of succession and other immediate family members
• the alienation was performed between divorced spouses, if the alienation is directly related to the divorce
• the alienation is directly related to the inheritance of real property
• the property has been alienated after three years from the date of its acquisition.

If you are not exempted, you are required to submit a real estate income tax return based on the alienation of the property to the competent branch office of the Tax Administration according to your residence within eight days of the alienation of the property.

The tax rate is 25 percent, calculated for the tax base comprising the difference between the income from the sale of the property (determined according to the market value of the property) and the purchase value of the property, increased by the growth of the prices of industrial products.