Whether companies or individuals, the foreigners, are allowed to buy real estate, but when it comes to purchases of land, foreign individuals are not permitted to possess land if they do not plan to construct on it right away. Therefore, very often foreigners purchase real estate through local companies, which become holders of the land until construction works are completed. It is only then that the transfer of the plot ownership is made to the foreign person.
In order to complete process of the purchase of a property in Montenegro and verify ownership, it is essential to fulfill two conditions; "justus titulus" Legal entitlement to the property, and "modus aquirendi" the registration of the said property with the Area Property Registry.
Afterwards a lawyer is appointed to secure the property.
A deposit of about 10% is paid and the preliminary contract is signed.
The deposit and the contract will be certified by a lawyer until the legal possession of ownership is transferred from the seller to the purchaser to secure the property, through court.
After agreeing a purchase price with the seller a 19% deposit is usually standard.
A contract is then drawn up and signed by both parties.
A purchase tax of roughly 2% of the real estate value is paid. The lawyers can work for both the parties at the same time but this can be arranged separately if desired by the parties, this entire process may take up to two months.
An enquiry is conducted by the Inland Revenue Office to determine the worth of the property and thereafter institute how much Purchase Tax will be paid.
Mortgages are commencing to become available in Montenegro from 50% to 70% loan-to-value.
The process of registering a property can be finished within a couple of days at the Land Registry office or may take up to 10 days.
Once the agreed amount of money has exchanged hands the purchase is now complete.
Fees and Taxes
Legal fees amount to around 1% of property purchases.
No Inheritance Tax.
Property purchase tax is 2%.
The Capital gains are not subjected to tax if they are realised by selling securities detained in the taxpayer portfolio for more than two years.
The Real Estate tax rate is proportional and it is in range from 0.08% to 0.8% of the real estate market value.
Real estate agent’s fees are usually 3 to 4 percent.