Property Tax in Montenegro

Real estate tax in Montenegro: features and key aspects

In Montenegro, the real estate tax is an important part of the costs associated with owning a home. It is important for investors and property owners to understand how this tax is calculated, what rates and obligations exist in order to avoid fines and misunderstandings.

The real estate tax rate

The property tax in Montenegro depends on two factors: the location of the property and its type. Usually the tax varies from 0.1% to 1% of the cadastral value of the property. Each municipal authority sets its own rate within this range. For example, in resort towns such as Budva or Kotor, the tax may be higher than in less touristic regions.

For residential real estate used by the owner for personal needs, the rate is usually lower than for commercial or rental real estate. If the object is used for commercial purposes, the tax may reach the upper threshold of 1%.

Tax calculation methods

The cadastral value of real estate is calculated based on a number of factors, such as the area, location and condition of the object. It is important to understand that the cadastral value does not always coincide with the market price, and it may be lower, which plays into the hands of the owner when calculating taxes.

The property tax is paid annually, and the owners are obliged to independently monitor the timing of its payment. In case of delay, penalties are accrued, which may lead to additional costs.

Benefits and exemptions

Montenegro provides certain tax benefits for certain categories of citizens. For example, owners of cultural heritage sites can expect partial or full tax exemption. There are also benefits for the disabled and pensioners, but they depend on local legislation and decisions of municipalities.

Capital gains tax on the sale of real estate

In addition to the annual tax on real estate ownership, Montenegro has a capital gains tax. This tax is levied on income earned from the sale of real estate if its value has increased. The tax rate is 15% of the profit. However, there are exceptions: if the property has been owned for more than three years and was used for the owner's residence, no tax is charged.

Property rental tax

If the owner of real estate in Montenegro rents it out, then he is obliged to pay tax on rental income. The rental tax rate is 9%, and the owners are required to register the lease agreement with the tax office.

Conclusion

Montenegro's tax system is relatively simple and transparent for foreign property owners. Real estate and rental tax rates are among the lowest in Europe, which makes the country attractive for investment. It is important to pay taxes on time and take into account all the specifics of local legislation in order to avoid fines and possible problems with tax authorities.