Property tax in Canton Sarajevo is paid by the buyers

Property tax is one of the most important costs for real estate owners in Bosnia and Herzegovina, which affects the budget, investment and legal certainty.

A very common question when you are buying real estates is whether and how much real estate sales tax you will have to pay. Also, is it possible for a taxpayer to be excluded from taxes, that is, who is considered a taxpayer?

If you bought, inherited or in any other way acquired real estate, if you sell it or give it away, you are obliged to settle the income with the state, unless you belong to the population category that is legally excluded from paying taxes in Bosnia and Herzegovina.

The payment of taxes in the Federation of Bosnia and Herzegovina is regulated by the laws on the real estate transaction tax, which were passed at the level of the entities, but also of each canton separately. In accordance with these laws, real estate sellers in all cantons of Federation of Bosnia and Herzegovina, except Sarajevo Canton, pay a 5% tax. This tax in Sarajevo Canton is paid by real estate buyers.

Real estate tax in Bosnia and Herzegovina is calculated based on the market value of the real estate and the tax rate of the region. The market value of real estate is determined by the tax administration based on the location, area, type and condition of the real estate.

The tax rate of the region is determined by the local self-government and ranges from 0.10% to 5%.

• Federation of Bosnia and Herzegovina tax rate - 5%;
• Republic of Srpska tax rate - 0.20%;
• Brčko District tax rate - from 0.10 to 0.20%.

The tax is paid once, annually or semi-annually, depending on the entity. Owners of real estate in Bosnia and Herzegovina receive a tax invoice (Decision on tax deduction) from the tax administration, which states the amount and deadline for tax payment. Payment can be made online, via bank transfer or in person at a tax office.

Depending on the interest rate, the fines for natural persons in case of non-payment of taxes within 15 days from the date of the purchase contract also vary. In FBiH and Brčko District, fines range from 200 to 1,000 KM, and in Republic of Srpska, the fine ranges from 1,000 to 3,000 KM.

In order to understand what your tax obligations are, it is important to consider what the real estate tax laws in Bosnia and Herzegovina treat as real estate. These are: apartments, houses, apartments in houses, garages, business premises, catering facilities, agricultural facilities, tourist facilities, facilities or real estate under construction.

In the case of land, laws prescribe the payment of taxes on construction land, agricultural land, forests and other land.

In FBiH, payment of property, inheritance and gift tax is prescribed in case you receive real estate as an inheritance or as a gift.

Inheritance tax is paid at the rate of 8% and gift tax is paid at the rate of 10%.

Inheritance tax is not paid by the heirs of the first line of succession, the spouse when inheriting in the second line of succession, parents and children without both parents if they are in regular education.

Gift tax is not paid by:

• the state of Bosnia and Herzegovina, Federation of Bosnia and Herzegovina, cantons, municipalities, their departments, administrative organizations and public institutions founded by the Canton;
• religious communities, endowments, religious endowments, foundations;
• children, spouse and parents of the donor;
• children without both parents who attend regular schooling.

Legal relief

Whether you are buying or selling real estate, check what tax benefits are prescribed by law, and whether they apply to you as well.

If you buy an apartment in an old building where the previous owner lived, you are exempt from paying VAT. But if you buy an apartment in a new building and become the first owner of that property, you are obliged to pay VAT (usually VAT is included in the selling price of the property).

Special categories of the population in the Federation of Bosnia and Herzegovina that are exempt from paying taxes when solving the housing issue or buying the first property are: family members of martyrs and fallen soldiers, war invalids, soldiers who spent at least 24 months in the units of the Armed Forces of the Republic Bosnia and Hezegovina during the war in Bosnia, children , spouses and parents of the real estate donor, and children without both parents who are in regular education.

Buyers of real estate in Federation of Bosnia and Herzegovina up to 38 years of age, who are solving the housing issue for the first time, are also exempted from paying real estate tax. This tax relief is prescribed for an area of ​​up to 30 m2 for the first member of the household, and for each subsequent member it is increased by 15 m2, which includes the spouse and their minor children. These tax benefits apply to both married and unmarried unions, with the fact that unmarried partners should be registered as buyers and co-owners of the real estate in the purchase agreement.

How to get a tax credit

In order to exercise your right to tax exemption, you need to submit documentation related to real estate to the competent municipal or cantonal tax administration. These are the agreement on the purchase and sale of the apartment, land registry extract, certificate of citizenship for the buyer, birth certificate, marriage certificate, birth certificate for minor children and certified statement of the buyer about joint household (household list).

Also, a certified statement that the buyer and his spouse are solving the housing issue for the first time, a decision on the recognized status of a family member of a martyr or a fallen soldier, a certificate on the status of a war invalid and a certificate on the status of a soldier and the time of service in the Armed Forces of the Republic of Bosnia and Herzegovina.

Keep in mind that without proof of paid tax, it is not possible to register ownership of real estate in the land registry.

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