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Buyers Guide
Foreigners may directly own buildings but they may not directly own land. However, it is an accepted and common practice on the Romanian real estate market for foreigners to own land indirectly through legal entities incorporated in Romania, even if such entities are wholly owned by a foreign entity or individual. All acquisitions of real property must be registered in the real estate registry (Land Registry) Registration of a change in ownership normally takes at least one week. Taxes and fees A stamp duty, including a fixed amount and percentage calculated on the value of the real property ranging from 0.5% to 3% (subject to 50% discount for transfers of undeveloped land), must be paid for notarisation of sale-purchase contracts involving real estate. Mortgages and transfers of real property must be certified by a notary. The fee is negotiable but normally ranges from 0.5% to 1.5%. Payments of commissions and fees for services performed in Romania (e.g. consultancy and management services) are subject to a withholding tax of 15% irrespective of the location where they are performed. Income tax If the landlord is an individual, the net rental income for buildings (i.e. after a deemed expenses deduction of 25%) is subject to individual income tax at a flat rate of 16% (rate as of 1 January 2005). If the landlord is a company, the net rental income is taxed at 16% profit tax (rate as of 1 January 2005).Expenses incurred for deriving rental income are tax deductible. In their Articles of Association companies should have rental activitylisted as their object of business in order to be allowed to let real estate property. Property tax Owners of buildings and special constructions are subject to building tax, irrespective of their location or function. For individuals, 0.2% is applicable on the value of buildings located in urban areas, and 0.1% elsewhere.For companies, building tax ranges between 0.5% and 1% of the accounting value. This percentage is increased to between 5% and 10% if the building has not been revaluated in the last three years. Owners of land are subject to land tax which is established at a fixed amount per square metre, depending on location. Capital gains tax. Sale of property may also necessitate the payment of capital gains tax of 16% or 10% if the property is owned for at least two years. The buyer as owner of property is subject to property tax (0.5% to 1%of the book value of the building). Agency fee is 3 % Solicitors fee is appr. 1 %
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