The PSD-PNL government is preparing to adopt a new Fiscal Code this week. Among other things, it will lead to the explosion of the price of apartments, in the context in which the number of real estate transactions has collapsed in Romania anyway because no one can afford a mortgage in the current conditions.
The newest blow from the Government for ordinary Romanians comes in the form of an increased VAT for housing, money that will come out of the buyer’s pocket at the next transaction. In the draft law that will reach Parliament, the current 5% quota will turn into 9%. In other words, overnight, the prices of apartments and houses in Romania will increase by 4%.
To make the stress complete, the new Fiscal Code also mentions a series of more detailed conditions that must be checked in order to benefit from this VAT rate. Failure to do so may even result in the application of the standard VAT rate of 19% for the transaction. The changes would apply from October 1, according to Avocatnet.ro.
Higher prices for apartments and houses in Romania, due to the new VAT
Punctually, according to the draft law, the VAT rate of 9% will be applied to the delivery of homes that have a useful surface of a maximum of 120 sqm, excluding the outbuildings, the value of which, including the land on which they are built, does not exceed the sum of 600,000 lei, exclusive of value added tax, purchased by natural persons individually or jointly with another natural person/other natural persons. The usable area of the house is defined by Law no. 114/1996, republished, with subsequent amendments and additions. Household annexes are those defined by Law no. 50/1991, republished, with subsequent amendments and additions.
It is also important to remember that a “reduced” rate of 9% is only applied in the situation where, at the time of delivery of the property, it can be lived in as such, a detail that in itself has its own definition. In any case, the cumulative conditions that homes should tick in order to benefit from the 9% quota are the following:
- free individual access to the living space, without disturbing the possession and exclusive use of the space owned by another person or family;
- access to electricity and potable water, controlled disposal of waste water and household waste;
- they consist of at least a space for rest, a space for food preparation and a sanitary group;
- exterior finishes include at least: roof, as appropriate, depending on the type of construction, windows, entrance door;
- interior finishes include at least: walls finished with paint, wallpaper, tiles or other elements used for finishing, floors finished with tiles, parquet or other elements used for finishing, interior doors, depending on the project;
- sanitary installations and sanitary objects, respectively toilet bowl, sink and washing machine with tub, with the related batteries;
- electrical installations including switchboards, boxes, switches and sockets.
Any natural person can purchase, starting from October 1, 2023, individually or jointly with another natural person/other natural persons, a single house whose value does not exceed the sum of 600,000 lei, exclusive of VAT, with a reduced rate of 9% .
