Frequently asked questions
What is the process of buying property in Montenegro?
The process typically involves the following steps:
Property Search: Work with a real estate agent to find suitable properties.
Offer and Agreement: Make an offer and negotiate terms.
Legal Check: Conduct a legal due diligence check ownership and to ensure the property is free of encumbrances.
Purchase Agreement: Sign a preliminary purchase agreement and pay a deposit (usually 10% via the notary).
Notarization: Sign the final contract at a notary office.
Registration: Register the property with the cadaster.
Payment: Complete the payment and transfer of ownership.
Why should I invest in real estate in Montenegro?
Montenegro offers a stunning natural landscape, a favorable climate, and a growing tourism industry, making it an attractive destination for real estate investment. Additionally, Montenegro's strategic location and EU membership prospects contribute to its potential for property value appreciation
Do I need a lawyer to buy property in Montenegro?
While it is not mandatory to hire a lawyer, it is highly recommended to ensure that all legal aspects of the transaction are handled correctly and to safeguard your interests. We can support in selecting a good lawyer in Montenegro.
Can foreigners buy property in Montenegro?
Yes, foreigners can buy property in Montenegro. There are no restrictions on foreign ownership, except for agricultural land and properties near military zones. However, certain legal procedures must be followed to complete the transaction.
What are the costs associated with buying property in Montenegro?
Costs typically include the purchase price, a 3-6% property transfer tax, notary fees, lawyer fees (if applicable), translator fees, and real estate agent commission (usually 3-6%). Additionally, there may be minor administrative fees for registration and other services.
Property Transfer Tax
The deadline for filing a property transfer tax report and tax payment is within 15 days from the date of purchase contract. Be mindful that the banking details for payment of the property transfer tax has been changed.
The property transfer tax rate has been changed from flat tax rate to progressive tax rate, applied on the market value of the property, as follows:
3% on market value up to 150.000 EUR
5% on market value of portion between 150.000 – 500.000 EUR
6% on market value of portion over 500.000 EUR
Prevention of money-laundering and terrorism financing
Relevant for companies (not individuals), the previous Law on prevention of money-laundering has been abolished and a completely new Law has been adopted. The register of Ultimate Beneficial Owners (UBO) has been established which requires each company to report its UBO’s to the registry of the government.
What taxes are involved in owning property in Montenegro?
Property owners are subject to an annual property tax, which varies depending on the location and value of the property: starting at 0.25% up to 2%, but in certain cases it can be as high as 5%. The property transfer tax is a one-time fee paid during the purchase process (see the FAQ about transfer tax).
Can I get a mortgage in Montenegro as a foreigner?
Yes, foreigners can obtain mortgages from Montenegrin banks, although the terms and conditions may vary. In practice, it will be difficult to arrange, but not impossible. We can support in the consultation with local banks to understand the specific requirements and conditions for foreign buyers.
Can I rent out my property in Montenegro?
Yes, you can rent out your property. Rental income is subject to tax (see the FAQ about tax on rental income), and it is advisable to ensure that your property complies with local rental regulations. Short-term rentals may require a rental license.
Are there any residency benefits for property owners in Montenegro?
Yes, property ownership can be a basis for obtaining temporary residence in Montenegro. The residence permit is initially granted for one year and can be renewed annually.
How is the rental market in Montenegro?
The rental market, particularly in tourist areas, is robust, with high demand for short-term vacation rentals during the summer season. Long-term rentals are also in demand in urban areas and among expatriates.
Protocol for issuing a tax residence certificate to individuals
An individual who is applying for tax residency certificate, must provide notarized of the personal identification documents, as well as proof of income generated in Montenegro, as follows:
Notarized copy of the passport.
Notarized copy of Montenegrin work and residency permit.
For residency based on employment - employment contract with a local employer or assignment contract to Montenegro (original or notarized copy).
For residency based on property ownership - rental contract as a proof of rental income and proof of ownership on the rental property (original or notarized copy).
For sport professional - professional sport contract or similar type of contract (original or notarized copy).
What is the tax on rental income in Montenegro?
A distinction needs to be made for properties owned by an individual, and those owned by a company. For individuals, income from leasing out real estate property is taxed at a flat rate of 15%. Costs can be deducted up to 30%. Property owners must declare their rental income and pay the tax annually. Additionally, there may be local surtaxes, depending on the municipality where the property is located.
What are the tax rates for inheritance tax on property in Montenegro?
The inheritance tax rate in Montenegro is generally 3%. However, close family members such as spouses, children, and parents are exempt from paying inheritance tax on property. Foreigners in Montenegro have the same inheritance rights to real estate as Montenegrin citizens.
Can I still apply for the Citizenship by Investment Program?
No. The Montenegro’s Citizenship by Investment program was opened in 2019, and ended on 31 December 2022.