5% VAT for all new residences under 450.000 lei – details and conditions

5% VAT for all new residences under 450.000 lei – details and conditions

Until now, the law allowed a 5% VAT only for the first acquisition of this kind, and after that, the VAT goes up to its normal value of 19% for all the other acquisitions.

Starting with 2019, at the same time with the modification of the Fiscal Code, the VAT will be 5% for any home purchase that meets the following requirements:

  • The maximum price of the residence, including the afferent land price, does not exceed 450.000 lei
  • The maximum useful surface does not exceed 120 sqm

Basically, 2 previous conditions have been removed, the one that imposed a surface of maximum 250 sqm for the land afferent to the residence, and the one that restricted a person or family to buy a single residence at the reduced 5% VAT.

The difference was significant – for the same apartment of 95.000 euros without VAT you should have paid 99.750 euros if you or your husband (wife) haven`t already had another apartment or house purchased with 5% VAT, instead of 113.050 euros if you have already purchased one before.

Unfortunately, it wasn`t included a change required by the developer, namely the growth of the threshold to which the facility of 5% VAT is applied to a value that would have permitted the purchase of the new, 3-rooms apartments in central or semi-central areas. For now, with a threshold of 450.000 lei (approximately 95.000 euros), the facility applies especially to the 2-rooms new apartments and studios, at least in Bucharest, in those areas that have a real investment potential.

The text from the Fiscal Code: “3. The delivery of the residences that have a useful surface of maximum 120 sqm, exclusively household annexes, whose value, inclusively the land on top of which they are built, does not exceed the sum of 450.000 lei, exclusively the value-added tax, purchased by individuals. The useful surface of the residence is the one defined by Residence Law no. 114/1996, republished, with further modifications and completions. The household annexes are the 12 ones defined by Law no. 50/1991 regarding the authorization of construction works execution, republished, with further modifications and completions. The low share is applicable only for those residences that, at the moment of purchase, can be lived as such.”