The Bulgarian authorities are considering changing the method used to determine the taxable value of property, which could lead to an increase in the annual tax on buildings and in the costs associated with property transactions.
The changes may be included in the 2027 state budget, according to Yavor Gechev, a member of the Bulgarian Parliament. The legislative framework for introducing the new system is planned to be drawn up in October–November 2026, after which a special working group will determine the new valuation coefficients. A final decision has not yet been taken.
It is proposed that the calculation of the taxable value should take more precise account of the property’s location, type and technical condition, year of construction, as well as actual prices on the property market. The current methodology has not been revised for many years, which is why the tax valuation of many flats and houses is significantly lower than their market value.
According to tax adviser Nikolai Ivanchev, a reasonable increase in the tax value could be 20–30 per cent. At the same time, he recommends capping the increase at 20 per cent so as not to place an excessive burden on property owners, particularly pensioners and those on low incomes.
As an example, the expert cited a flat or house in Sofia with a market value of 150,000–200,000 euros, the tax valuation of which is around 50,000 euros. At the municipal rate of 2 per mille, the owner currently pays around €100 a year. Following a 20–30 per cent increase in the valuation, the payment could rise to approximately €120–130.
The reform will affect more than just owners’ annual payments. The tax valuation is used to calculate part of local taxes, notary fees and other costs associated with the formalities of buying or selling property. Therefore, an increase in the valuation will make transactions slightly more expensive, even if municipal rates remain unchanged.
Lawyers suggest that rising costs associated with purchasing and maintaining a home may affect demand. Properties that previously attracted buyers due to low taxes and running costs may become less appealing if mandatory payments increase significantly.
The authorities have long delayed revising the methodology due to the high proportion of homeowners. According to participants in the discussion, over 90 per cent of Bulgaria’s residents own property, so a tax increase could provoke a significant public and political outcry.
At the same time, the idea of a higher tax on second and subsequent flats is being discussed. However, experts consider this difficult to administer: around 8–9 per cent of the population own multiple properties, and the additional costs to local authorities could prove comparable to the expected revenue.
Consequently, Bulgaria has not yet decided to increase property tax. At this stage, discussions are focusing on updating the tax valuation of properties, with the possible introduction of a new methodology from 2027. The actual amount of tax payable will depend on the approved coefficients and rates set by each municipality.