The property market has grown significantly in Bosnia and Herzegovina over the past few years, which has attracted not only local but foreign investors as well. Located in the western Balkan, Bosnia and Herzegovina Bosnia and Herzegovina is composed of two entities, the Federation of Bosnia and Herzegovina and the Republic of Srpska along with a third unit under local governance known as the Brčko District. The country has a strategic location and competitive property prices, enhancing real estate transactions, particularly in the commercial and tourism sectors. This article provides an analysis into the main characteristics of real estate sector in Bosnia and Herzegovina.
The Eligibility of Foreign Citizens to Acquire Real Estate in Bosnia-Herzegovina
In Bosnia and Herzegovina, there are no restrictions on the sale of real estate to foreigners; individuals can buy, lease, and trade both residential and commercial properties. Foreign investors who have just established a company, are eligible to buy property without restriction, even with 100% ownership. They assume the same legal rights and obligations as local Bosnia and Herzegovina entities.
In the Federation of Bosnia and Herzegovina, an individual must first secure a permission for the acquisition of agricultural land from the local government authorities. Special consent has been abolished for all other transactions such as commercial, investment and funds.
High-Demand Areas for Investment
The capital city of Sarajevo has investment opportunities which are very attractive and draws interest from foreign investors because of its growing demand for both commercial and residential real estate. The real estate sector is particularly relevant in cities such as Zenica, Tuzla, and Mostar which showed a significant increase in the construction of new buildings. Housing prices in the Municipality of Sarajevo, located within the Federation of Bosnia and Herzegovina, remain high, at 3,500.00 BAM/m2.
Property Taxes and Rates
Property Taxes
Property taxes in Bosnia and Herzegovina are different in the specific administrative regions, so they vary in accordance with the different models used in the municipalities. In the Federation of Bosnia and Herzegovina, taxes on real estate are set at the cantonal level, each of the ten cantons setting its own tax rates and categories of taxpayers. In this area, the tax rates range from BAM 0.5 to BAM 3 per square meter.
Republika Srpska property tax rates are uniform, which implies that they were set at 0.20% of the property’s current market value annually. The Brčko District chooses the property tax rate through the assembly on an annual basis and then decides between 0.05% and 1% of the property’s market value, which is based on the proposed annual budget.
Transfer Taxes
Land and real estate transfer taxes are not the same for all regions in Bosnia and Herzegovina. In the Federation of Bosnia and Herzegovina, the tax’s allocation is done through the cantonal level, and each canton shall establish its own tax rates, which however should not be over 5%. Even so, in the Republika Srpska and the Brčko District, no tax is applied to the transaction of land and real estate.
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