Slovakia suffered somewhat on the international scene from its parting from the Czech Republic on 1st January 1993 as the famous city of Prague took the headlines with its tourist, business and property investment attractions. Since then, the country has established itself in the international community and as a stable economic force in the region.

The capital, Bratislava, has been the focus of much development and has managed to attract the attention of the international business community, but the advantages of buying property in Slovakia extend far beyond the city. There are established resorts for summer and winter activities in the High Tatra Mountains, and although Slovakia is landlocked, there are plenty of lakes and rivers to provide aquatic adventure.

The development of Slovakia as an independent force has seen it become a member of NATO and the OECD, and in May 2004 it joined the European Union as a full member. On 1st January 2008, Slovakia formally joined the Eurozone, replacing all currency with the Euro.

Slovakia and the EU includes links to Slovak government sites and Tourist Information.

Slovakia is dominated by the mountainous terrain of the Carpathian Mountains, which stretch right across the northern half of the country. Among these peaks are the national parks of the High and the Low Tatra Mountains, which give the country some of the leisure destinations used by Slovaks for holidays, and are now coming to the attention of the international tourist community. This, in turn, is leading the overseas property market to the region, and many people are now investing in some of the off-plan and mid-construction properties that are on the market.

The High Tatras offer skiing for a good winter season, as well as a well-developed range of summer activities for outdoor enthusiasts. Walking and climbing are ideal in the mountains, but there are more mountain bike, paragliding and paramotor facilities available all the time. In mountains like the Tatras, this is an ideal activity given the ruggedness of the terrain and the relative lack of urban development.

The buying process: Buying property in Slovakia is a simple and the process even for overseas buyers is easy to understand and complete. Once you have found the property that you want to buy, the first stage is to make an offer and have it accepted. Once your offer has been accepted, a 10 per cent deposit is due from you to secure the property, take it off the market and allow the legal processes to begin.

You need to appoint a good English speaking lawyer who is experienced in representing foreign buyers.

The lawyer will prepare an official pre-contract agreement which needs to be signed by both parties. This sets out the terms of the deal, as well as locking both the buyer and seller into the deal. Should you change you mind about buying after this, you will have to pay any agent’s costs incurred as a penalty, which will be deducted from your deposit. If the seller pulls out of the deal, they must return your full deposit and cover any agent’s fees incurred.

A surveyor’s report is arranged and you should make sure you have the survey carried out by an independent surveyor and sent to the solicitor in order that the sales contract can be compiled. All of the documentation should be translated into English to make sure you know what you are buying ahead of signing.

For legal certainty, buyer should never pay cash before the transfer of property ownership is finished.

Once both parties are happy with this contract, it is signed and the remaining money paid over to the vendor. Before becoming the full and legal owner of the property, the buyer must register the deal with the Kataster, a process that takes around four weeks.

Mortgages/Loans: Mortgages for foreigners are available in Slovakia. Terms and conditions are pretty much the same as European standard and Slovak banks have no problem with lending money to foreign investors. The application requires documentation such as your passport, proof of address, six months of bank statements and a proof of income and employment.

Usually, the bank lends maximum 70 percent of the property’s market price and the interest rates are around 5-7%. Some buyers use to purchase real estate mortgage financing and as security for loan they use the property itself.

Terms are quite standard, and Slovakian banks will lend to a wide range of foreign investors. All you need to apply are documentation such as your passport, proof of address, six months of bank statements and a proof of income and employment. Loans are usually granted for up to 85 per cent of the purchase price or property value, with interest rates starting at 3.55 per cent.

Many buyers prefer to finance their property from their country of origin by re-mortgaging an existing property in order to raise the funds for their overseas purchase. This has the advantage of keeping transactions in the currency of your native currency and allowing you to track economic developments more easily, but you may at times lose out on lower interest rates in Europe. The advice of an independent financial adviser who specialises in overseas property can be invaluable in deciding how to pay for your property overseas.

Fees and other Costs:  Other than the property price itself the fees and taxes are relatively low:

  • Expenditures on sales contract may vary according to which lawyer or agent  you hire, generally around 500-600 EUR.
  • Administrative fees for cadastral office (application for entry into the cadastre, extract from the property ownership document) 300 EUR
  • Registration with tax authorities + local taxes – 100 EUR per year
  • Property tax and other small taxes – 30 EUR per year
  • Property sold within five years after construction is subject to 19% VAT.

If buyer plans to let the property, he/she will need to allow for the costs of a managing agent. Buy-to-let management can cost about 200 EUR per year plus 19% tax on rental profits. At resorts, the property management prices vary a lot.

There is no property transfer tax in Slovakia. Therefore the purchase of the property is not financially burdened, but there is the income tax of 19%. The tax liability is calculated as the difference between the acquisition property price and the selling price. The Income Tax Act, however, allows many options where the seller is not required to pay tax or the tax base can be reduced (for example, permanent residence in the property for more than 2 years).

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Disclaimer: This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may also vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice in the country that the information refers to.

06-11-2009