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Everything you need to know is included in our Croatia Property Pack
Croatia, with its breathtaking scenery, rich cultural history, and welcoming locals, draws in many foreigners looking for real estate investment opportunities.
Nevertheless, understanding the complexities of buying property in a foreign country can be daunting, particularly concerning the legal framework and regulations involved.
That's why this guide is here to help! We'll explain how the property market operates in Croatia in an easy-to-follow manner, covering all you need to know.
Also, for a more in-depth analysis, you can check our property pack for Croatia.Can you purchase and own a property in Croatia as a foreigner?
If you are American, we have a dedicated blog post regarding the property buying and owning process in Croatia for US citizens.
Understanding real estate ownership in Croatia as a foreigner involves navigating a set of rules that vary based on your nationality and the type of property you're interested in.
Firstly, foreigners can indeed purchase real estate in Croatia, but there are nuances. If you're from the EU, the process is relatively straightforward.
You have almost the same rights as Croatian citizens when it comes to buying property, including land. This is because Croatia, as an EU member, seeks to provide equal treatment to all EU citizens.
However, if you're from outside the EU, it's a bit more complex. You can still buy property, but you'll need approval from the Ministry of Justice.
This process involves verifying that there's a reciprocal agreement between Croatia and your home country, allowing Croatians the same property-buying rights there.
This doesn't usually apply to agricultural land or forest areas, which are often restricted for foreign buyers.
There's no requirement to reside in Croatia to purchase property. Owning real estate doesn't grant residency rights, though it can be a supporting factor if you apply for residency.
Regarding visas and permits, you don't need these just to buy property.
However, if you plan to stay in Croatia for an extended period, you'll need to adhere to the usual immigration laws, which may require a visa or a residence permit, depending on your nationality and length of stay.
A specific authorization from a governmental institution, other than the approval from the Ministry of Justice for non-EU buyers, isn't typically required.
However, the buying process does involve legal checks, such as ensuring the property has a clean title, no outstanding debts, and that it's properly registered.
As for minimum investment, Croatia doesn't have a set amount that you must spend to buy property.
The investment depends on the property's location, size, and type. Coastal properties, for instance, are generally more expensive than those in rural areas.
It's also important to be aware of the tax implications. There's a property transfer tax, which is typically a percentage of the property's value. Plus, if you're buying a new build, you might be subject to VAT.
Can you become a resident in Croatia by owning a property?
Croatia did not have a specific residency-by-investment program linked directly to real estate purchases.
This means that simply buying property in Croatia does not automatically grant you residency rights. However, owning property can be a supporting factor in your residency application under other categories.
If you're interested in obtaining residency in Croatia, there are several routes, but they generally don't hinge solely on real estate investment.
Common pathways include employment, starting a business, family reunification, and study. Each of these routes has its own set of requirements and procedures.
For instance, if you're looking to move to Croatia for work, you would typically need to have a job offer from a Croatian employer.
Starting a business in Croatia is another viable route, but this involves more than just investing in property; you'd need to establish an actual business that contributes to the Croatian economy.
When applying for residency, owning property can be advantageous. It demonstrates your commitment to living in Croatia and can be a plus point in your application.
However, the key is to meet the primary requirements of the specific residency category you're applying under.
The duration of residency permits varies. Initially, you might receive a temporary residency permit, which can be renewed.
After a certain period, which usually spans several years, you might be eligible to apply for permanent residency. The exact duration and requirements can vary depending on your specific circumstances and the residency category.
As for citizenship, gaining Croatian citizenship typically requires several years of continuous legal residence, proficiency in the Croatian language, and an understanding of the Croatian culture and legal system.
Owning property in itself does not directly lead to citizenship, but long-term residency, which might include periods living in property you own, can be a stepping stone towards citizenship.
Since there's no direct investment-for-residency scheme in Croatia, there aren't specific figures on how many people have used property investment to gain residency.
Thinking of buying real estate in Croatia?
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Market metrics
You can find fresh and updated data in our pack of documents related to the real estate market in Croatia.
By examining the the the GDP per capita indicator, we can deduct that Croatian people have become 20.6% richer over the last 5 years.
With the population experiencing increased affluence, the demand for real estate may surge, potentially causing prices to rise in the future.
The website Numbeo tells us that rental properties in Croatia offer rental yields between 1.7% and 4.4%.
These yields are typically seen in markets with average demand and rental rates, where the rental income generated from the property covers the expenses associated with owning and maintaining it, while also providing a modest return on investment.
To know more, you can also read our dedicated article: is it a good time to buy a property in Croatia?
The life as an expat
Living as an expat in Croatia can really be an awesome experience.
The country is known for its stunning natural beauty, with its Adriatic coastline, rolling hills, and lush forests. The culture is rich and vibrant, with a mix of traditional and modern influences. The people are friendly and welcoming, and there are plenty of opportunities to explore the country.
Croatia is a relatively safe and affordable place to live, and the cost of living is lower than in many other European countries. Expats can find a variety of housing options, from apartments and villas to houses and cottages. There are plenty of activities to enjoy, from outdoor pursuits such as hiking and swimming to cultural attractions such as museums and galleries.
The healthcare system in Croatia is generally good, and expats can access public and private healthcare. Education is also of a good standard, with both public and private schools available. Expats will find a range of job opportunities, from teaching to working in the tourism industry.
Overall, living as an expat in Croatia can be a great experience. With its stunning scenery, friendly people, and low cost of living, it is an ideal destination for those looking for a new adventure.
What are the best places to buy real estate in Croatia?
This table summarizes some of the best places to buy a property in Croatia.
| City / Region | Population | Average Price per sqm (HRK) | Strengths |
|---|---|---|---|
| Zagreb | ≈ 800,000 | 8,000 - 15,000 | Capital city, cultural and economic center, historic architecture, vibrant arts scene |
| Dubrovnik | ≈ 42,000 | 10,000 - 25,000 | UNESCO World Heritage Site, stunning Old Town, Adriatic Sea views, tourism |
| Split | ≈ 180,000 | 8,000 - 15,000 | Ancient Roman palace, coastal city, vibrant nightlife, gateway to islands |
| Rijeka | ≈ 130,000 | 7,000 - 13,000 | Port city, rich maritime heritage, cultural events, proximity to Kvarner islands |
| Zadar | ≈ 75,000 | 7,000 - 13,000 | Historic town, Roman ruins, unique Sea Organ and Sun Salutation installations |
| Pula | ≈ 57,000 | 6,000 - 12,000 | Ancient Roman amphitheater, coastal city, diverse cultural heritage |
| Osijek | ≈ 108,000 | 6,000 - 11,000 | Eastern Croatian city, cultural and educational center, Baroque architecture |
Want to explore this further?
- Is it worth it buying property in Split?
Do you need a lawyer to buy a property in Croatia?
When purchasing a property in Croatia, it is advisable to engage a local lawyer to navigate the legal requirements and ensure a successful transaction.
One crucial document they can assist with is the Purchase Agreement (Ugovor o kupoprodaji), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Croatian lawyer can also help with conducting a Land Registry Search (Izvadak iz zemljišne knjige) to verify the property's ownership status and identify any potential legal issues or encumbrances.
Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry Office or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Croatian laws and regulations.
What are the risks when buying real estate in Croatia?
We've got an article dedicated to the risks associated with purchasing property in Croatia.
1. Restitution Claims and Ownership Disputes:
Croatia has a complex history of property ownership, particularly regarding properties confiscated during World War II and the Yugoslav era. Restitution claims and unresolved ownership disputes can arise, leading to legal complications and potential challenges in establishing clear ownership rights. Buyers should conduct thorough due diligence and seek legal advice to ensure the property's title is secure.
2. Zoning and Urban Planning Issues:
Croatia's zoning and urban planning regulations may vary between regions and municipalities. In some areas, illegal constructions and non-compliance with zoning laws have been reported. Buyers should carefully review the property's planning status and ensure it complies with regulations to avoid potential fines, demolition orders, or limitations on future development.
3. Landmines and Unexploded Ordinances (UXOs):
Due to the conflicts in the 1990s, there are still certain areas in Croatia that are contaminated with landmines and unexploded ordinances (UXOs). These areas are typically marked and demarcated, but buyers should exercise caution, especially when purchasing properties in rural or border regions. Conducting thorough risk assessments and consulting local authorities is advisable.
4. Coastal Development and Coastal Zone Protection:
Croatia's coastline and islands are popular tourist destinations, leading to increased demand for coastal property development. However, strict regulations govern construction and development in coastal areas to protect the environment and maintain the integrity of the coastline. Buyers should be aware of the coastal zone protection laws and ensure compliance when purchasing coastal properties.
5. Infrastructure and Access Issues:
In certain rural and remote areas of Croatia, infrastructure and access to basic services such as water, electricity, and road networks may be limited. Buyers should assess the property's infrastructure provisions and consider the costs and challenges associated with ensuring adequate utilities and access to amenities.
6. Flooding and Natural Disasters:
Some regions in Croatia are prone to natural disasters such as flooding, earthquakes, and forest fires. Buyers should evaluate the property's vulnerability to these risks and consider insurance coverage and mitigation measures to protect their investment.
7. Limited English Proficiency:
While English is commonly spoken in tourist areas, some parts of Croatia may have limited English proficiency, especially in rural and less developed regions. Buyers should be prepared for potential language barriers when dealing with local authorities, contractors, and other parties involved in the property purchase process.
8. Real Estate Market Transparency:
The real estate market in Croatia may have varying levels of transparency and documentation standards. Buyers should exercise caution and ensure all necessary legal and financial documentation is in order. Engaging professional services, such as local real estate agents and lawyers, can provide valuable guidance and ensure a smooth and transparent transaction.
Everything you need to know is included in our Croatia Property Pack
What is the list of documents needed for a real estate transaction in Croatia?
When buying a property in Croatia, the list of documents needed includes:
- A valid passport or other form of government-issued identification;
- A valid Croatian residency permit, if applicable;
- A notarized purchase agreement;
- A proof of ownership document;
- A certificate of registry;
- A certificate of occupancy;
- A certificate of title;
- A certificate of good standing;
- A certificate of no encumbrances;
- A certificate of zoning; and
- A certificate of completion.
We review each of these documents and tell you how to use them in our property pack for Croatia.
How to develop a successful negotiation plan when dealing with Croatian people?
When negotiating to buy a property in Croatia, keep in mind key aspects of Croatian culture.
Firstly, Croatians value personal relationships and trust. So, take the time to build a good relationship with the seller as it can greatly influence the negotiation process. For example, you could start the negotiation conversation by expressing genuine interest in the seller's background, their experience with the property, or any other topic that allows you to establish a personal connection.
Being punctual is highly appreciated in Croatia. Showing up on time for meetings demonstrates respect and professionalism.
You may know it already but Croatians prefer direct communication, so it's best to be straightforward and avoid excessive small talk.
Additionally, family holds great importance in Croatian culture. For example, during your property negotiation in Croatia, if you learn that the seller has a strong connection to their family, showing interest and respect for their family can have a positive impact.
Can foreigners get a mortgage in Croatia?
Yes, foreigners can obtain property loans in Croatia. The Croatian banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.
Foreigners looking to obtain a property loan in Croatia generally need a valid residence permit, proof of income or employment, and must meet the specific criteria set by the lending institutions in the country.
Some banks in Croatia that can grant mortgages to foreigners include Zagrebačka banka, Privredna banka Zagreb, and Erste&Steiermärkische Bank.
Furthermore, mortgage rates in Croatia for a 20-year term range from 1% to 5%, which are remarkably good.
What are the taxes related to a property transaction in Croatia?
Here is a breakdown of taxes related to a property transaction in Croatia.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Real Estate Transfer Tax | A tax on the transfer of ownership | 3% of the property's value or the tax assessment value, whichever is higher | Buyer |
| Value Added Tax (VAT) | Tax on the sale of newly built properties | 25% of the property's value | Buyer |
| Property Tax | Annual tax on the property's value | 1,5% of the estimated value of the property | Owner |
| Capital Gains Tax | Tax on the profit from the sale of the property | 25% on the net capital gain (the difference between sale price and acquisition cost) | Seller |
For a more detailed calculation, refer to:
- the Croatian Government's website
- the Croatian Tax Administration's website
What fees are involved in a property transaction in Croatia?
Below is a simple breakdown of fees for a property transaction in Croatia.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Property Registration Fee | Fee for registering the property with the Land Registry | 200.00 HRK for registration or conditional registration of ownership | Buyer |
| Notary Fees | Fees for notarizing property-related documents | Varies between 1% and 2% of property value | Buyer |
| Legal Fees | Fees for legal assistance in the property transfer process | Varies depending on the agreement between the buyer and the lawyer | Buyer |
| Real Estate Agent Fee | Commission fee for real estate agent services | Typically 2% to 4% of the property's sale price | Buyer and/or Seller |
You can find more information about the calculation on:
- the Croatian Government's website
-Buying property as a foreigner in Slovenia: the guide
Buying real estate in Croatia can be risky
An increasing number of foreign investors are showing interest in Croatia. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.