Bulgarian authorities are considering changing the methodology for determining the taxable value of real estate, which could lead to an increase in annual property taxes and transaction costs when buying or selling real estate.
The changes may be included in the 2027 state budget, said Bulgarian MP Yavor Gechev. The legislative framework for implementing the new system is scheduled to be drafted in October–November 2026, after which a special working group will determine the new valuation coefficients. A final decision has not yet been made.
When calculating the taxable value, it is proposed to take into account more accurately the property’s location, type, and technical condition, the year of construction, as well as actual prices on the real estate market. The current methodology has not been revised for many years, so the tax assessment of many apartments and houses is significantly lower than their market value.
According to tax consultant Mykola Ivanchev, a reasonable increase in the tax value could be 20–30%. At the same time, he recommends limiting the increase to 20% to avoid placing an excessive burden on property owners, especially retirees and low-income citizens.
As an example, the expert cited an apartment or house in Sofia with a market value of 150,000–200,000 euros, whose tax assessment is approximately 50,000 euros. At the municipal rate of 2 per mille, the owner currently pays about 100 euros per year. After a 20–30% increase in the assessment, the payment could rise to approximately 120–130 euros.
The reform will affect more than just owners’ annual payments. The tax assessment is used to calculate a portion of local taxes, notary fees, and other costs associated with the purchase or sale of real estate. Therefore, an increase in the assessment will make transactions somewhat more expensive even if municipal rates remain unchanged.
Legal experts suggest that rising costs associated with purchasing and maintaining housing could affect demand. Properties that previously attracted buyers with low taxes and operating costs may become less appealing if mandatory payments increase significantly.
Authorities have long delayed revising the methodology due to the high proportion of homeowners. According to estimates by participants in the discussion, over 90% of Bulgaria’s residents own real estate, so a tax increase could trigger significant public and political backlash.
At the same time, the idea of a higher tax on second and subsequent apartments is being discussed. However, experts consider this difficult to administer: about 8–9% of the population owns multiple properties, and the additional costs for municipalities may prove to be comparable to the expected revenue.
Thus, Bulgaria has not yet made a decision to raise the property tax. At this stage, discussions are focused on updating the tax assessment of properties, with the possible implementation of a new methodology starting in 2027. The actual amount of payments will depend on the approved coefficients and rates set by each municipality.
