The new Act on Amendments to the Socially Stimulated Housing Construction Act, published in the Official Gazette No. 72/2025 on April 23, 2025, introduces significant changes and tax relief for citizens who are purchasing or building a property for the first time to solve their own housing needs. The main novelty is a tax refund – either 50% of VAT for new construction or the real estate transfer tax (3%) for existing properties.

Here are the key points and conditions for exercising this right:

Who is Eligible for a Refund?

Croatian citizens who cumulatively meet the following conditions are eligible for the tax refund:

  • Age Limit: The applicant must be under 45 years of age at the time of application.
  • First Property: Neither the applicant, nor their spouse/common-law partner, life partner, nor children, may own another property suitable for living in Croatia or abroad, nor have they owned one before January 1, 2025.
  • No Prior Support Used: The applicant and close family members have not used APN subsidies or any other state, city, or county housing support.
  • Registered Residence: The applicant and members of their close family must have a registered residence and reside in the location and at the address where the property is located.
  • Contract Date: The real estate purchase agreement must be concluded after January 1, 2025. For construction, the occupancy permit for the family house must become legally binding after January 1, 2025.

Types and Amounts of Refunds:

The measure covers two types of refunds: VAT or Real Estate Transfer Tax, depending on the type of property and method of purchase:

1.Purchase of new construction from a legal entity (investor):

  • The property price includes 25% VAT.
  • Entitlement to a refund of 50% of the paid VAT is granted.

To apply for support for the construction of a family house, you will need the following documentation:

  • Copy of identity card
  • Occupancy permit that became legally binding after January 1, 2025.
  • Construction contract based on which VAT was paid.
  • Invoices for design and supervision.
  • Land registry extract.
  • Certificate of residence.
  • Proof of sale of a previous property, if you owned a property deemed unsuitable.

This measure is more generous in many cases, given the amount of VAT is quite significant.

2.Purchase of an existing property from a natural person:

  • Real estate transfer tax is paid at 3% of the market value of the property.
  • This amount can be fully (100%) reimbursed through the support payment.

Square Footage and Price:

Although the law is more flexible than previous proposals, there are certain limitations:

  • Recommended Areas: The law defines recommended residential areas based on the number of household members but allows for a deviation of up to 50% above the prescribed limit. Precise recommended areas (e.g., 50 m² for one person, 65 m² for two, 80 m² for three, etc.) are defined in more detail by implementing regulations.
  • Price per Square Meter: The price per square meter of the purchased property may not exceed more than 50% of the local average property price. If the property price exceeds these thresholds (square footage or price per m²), the right to support does not entirely cease, but the refund is calculated according to the prescribed size or average price.

Procedure and Other Important Notes:

  • Where to Apply: Refund applications are submitted to the Agency for Legal Transactions and Mediation in Real Estate (APN), and are approved in the order of receipt of complete applications.
  • Application Deadline: The application can be submitted within 24 months from the date of concluding the purchase agreement.
  • Required Documentation: The application must be accompanied by a copy of the identity card, the purchase agreement (concluded after January 1, 2025), proof of paid real estate transfer tax or an invoice with VAT stated (issued after January 1, 2025), proof of registered residence, and a statement that no previous state support has been used.
  • Obligation to Use the Property: Beneficiaries of the support will have to return it if they sell or rent out the property, or deregister their residence and do not use it within 5 years. This measure ensures that the support is used for actual housing needs.
  • Non-Taxable: Support for the acquisition or construction of a first residential property is not taxable.

This measure represents significant support for young families and individuals in Croatia, easing their path to their own home. For the most precise and up-to-date information, it is recommended to follow the official websites of the Ministry of Physical Planning, Construction and State Property, and the APN.

Source: Act on Amendments to the Socially Stimulated Housing Construction Act, Official Gazette 72/2025

 

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