The prices of apartments and houses in Romania continue to be on an upward trend in 2021, with expectations that the trend will continue also in 2022. Even if the pandemic may have slowed down a bit the growth rate, real estate specialists in Romania say that the price growth trend will continue.
So, if you have been planning to sell a property you own in Romania, this may be the right time.
If you have already found a buyer and are now checking on the potential taxation on property sale, this is the right place. The first good news for you is that, depending on the sale price of your property, you may not need to incur any taxation on your property sale in Romania. We further explain below on the reason.
So, to ensure you cash in the amount of money you planned for, do your calculations carefully, because the sale of a property in Romania entails potential tax costs, on which we detail below.
When should you pay tax on sale of real estate in Romania?
The sale of a property located on Romanian territory is subject to taxation under the Romanian tax law. The income tax due by an individual at sale of the property applies only on the sale value that exceeds the amount of 450,000 RON, i.e., approximately 91,000 euros. Otherwise, if the sale price does not exceed the value specified above, there will be no income tax due on the sale amount.
How to determine the taxation on property sale
The income tax rate that applies on sale of real estate is 3%. Therefore, if you sell your property for a value that exceeds 450,000 RON, you must pay a 3% income tax. The income tax of 3% applies to the difference between the sale price and the non-taxable threshold of 450,000 RON.
If the property you sell is owned together with other persons, for example your spouse, the 3% income tax is due by each, and applies proportionally, on the part of the sale price corresponding to each person’s ownership percentage. For example, if the property is owned by four persons in equal percentage, the taxable income determined as explained above (as the difference between the sale price and the non-taxable threshold of 450,000 RON) must be allocated to each owner in percentage of 25%, and each of them must pay income tax of 3% on the taxable income derived.
If you sell the real estate to a family member (up to 3rd grade relative), the obligation to pay the income tax still applies. The only case when the sale is not subject to taxation is when the property is donated to a relative of up to the 3rd grade, or when it is inherited.
The sale price that must be taken into account for calculating the income tax due is the one declared in the sale-purchase contract. Nevertheless, if the sale value is lower than the standard evaluation price as per the Romanian notaries’ evaluation grid, the value that will be considered for taxation purposes will be the latter.
You have to know that, if in the sale-purchase contract you declare a different amount then the actual sale value, you risk criminal consequences for tax evasion, but also civil ones, which can also end with the annulment of the sale-purchase agreement.
So, as a summary of the above, you will incur taxation on property sale in Romania only if the amount thus obtained exceeds 450,000. The income tax due will be 3% applicable to the difference between the sale price and the non-taxable threshold explained above.
How should the tax on sale of property be paid?
The good part about the income tax payment due by individuals for the sale of real estate is that the tax is paid at the notary office, before the authentication of the sale-purchase agreement. It is the obligation of the notary public to perceive and cash in the income tax due from you, and further transfer it to the Romanian tax authorities’ account. The payment deadline that the notary must observe is the 25th of the following month in which the tax is collected.
As an important procedural note, foreign citizens who do not have Romanian citizenship, and sell a property in Romania, will be able to finalize a property sale transaction and get the income tax paid on their behalf only after obtaining a Romanian tax identification number from the local tax office (ANAF). For more details on the Romanian tax identification number application procedure, you can check our article: How to obtain a Romanian tax identification number.
Other taxes or fees that may be due on the sale of property
As a seller of real estate in Romania, you should have no other tax or financial costs. The buyer is the one who should incur any other transaction related costs, but it is also useful for you to know them, if for example they are brought into the price negotiation discussion.
For the authentication of the sale-purchase agreement by the notary, there are certain types of fees that will apply. The buyer is the one who pays the notary fee for the authentication, the tabulation fee, as well as the mortgage contract authentication fee, if applicable.
The value of these fees depend on the sale price and the method the buyer uses to pay for the property: no mortgage, with mortgage, through the “New Home” or “First Home” state sponsored programs, etc.. Also, you have to take into account that the notary fees may vary depending on the fees grid applied by each local public notaries.