Property tax assessment: what is it for and how is it issued?

The property tax assessment certificate under Art. 264, para. 1 of the Tax Procedure Code is one of the obligatory documents required in connection with real estate transactions and it is necessary not only for purchase and sale, but also for donation, mortgage, home loan or refinancing.
To find out what a tax assessment is, why we need one and how it is issued, read here!

What do we need the property tax assessment for?

Tax assessment is an extremely efficient method of collecting taxes from taxpayers. If you have debts to the Treasury relating to a property you own, you cannot dispose of it until you have paid them. Also, you cannot get a loan to mortgage it.

Proof of tax paid

The purpose of the tax assessment is to assist in the process of collecting the taxes that each homeowner must pay, and the tax assessment certificate is also proof of taxes already paid to the state.

It is not a document of the presence or absence of debt - the certificate can be issued without all taxes and fees due having been paid. In this case, however, in order for the property transaction to be possible, it will be necessary for either the current owner to pay his debt to the state, if any, or for the buyer to agree to have the obligation partially or fully transferred to him.

When mortgaging and transferring the property

As mentioned above, the certificate accompanies not only the sale, but also any legal action involving real estate, including mortgaging, transferring, donating property, taking out a home loan, and refinancing.

When selling the property

Also, when paying off real estate related debts, obtaining this tax assessment certificate gives you the green light with which you can now safely proceed with the sale of your property.

How is a tax assessment issued?

In order to be fully aware of the tax assessment process, it is particularly important to familiarise yourself with who can actually make this type of application. The following persons are eligible to apply for a tax assessment:

The owner of the real property. A check is made in the information system whether the person has filed a declaration in cases where there is a statutory obligation to declare;
The person authorised to represent the owner. A reference is made to verify the person's representative authority;
The person who has the capacity of a transferee of state or municipal property by virtue of a relevant order. In such a case, the verification shall consider the copy of the order submitted by the person;
The person designated as heir, identified by an identity document and a certificate of heirs. In this case, a check shall be made in the information system to ascertain whether a declaration has been made by the heir or testator;
The person who has the role of legatee of the estate. It is necessary to identify him/her with an identity document and a certificate issued by a notary. The certificate must include the testator's details (full name, personal identification number and address of last residence and details of the immovable property and its location) and also the bequeathed portions of the property.

It is important to bear in mind that the application for the assessment could also be submitted by a third party not belonging to those already mentioned, but it is a prerequisite that the certificate is received by one of the persons listed, once he himself has been duly legitimised. Also, it is important to say that in the case of a co-owned property, one of the owners is sufficient - he receives instead of all.

In the conditions for issuing a tax assessment there is a time limit. The period for which the tax assessment certificate is issued is within two weeks from the time the application is submitted.
It is important to note that certificates issued by 30 June of the current year are valid until that date the following year. Certificates issued after that date are valid until the end of the current year. However, there is an exception to the rule. If the property tax liability has been paid for the entire year, and this information is explicitly entered on the certificate, it is valid until the end of the current year, regardless of the date of issue.

As we have already said, the time taken to issue the tax assessment certificate is two weeks, starting from the time the application is submitted. Normally this service costs around 17 BGN (for the Metropolitan Municipality), but you can also take advantage of an express service where you get the necessary document in about one or two days.

Where can I get a tax assessment?

The tax assessment certificate is issued by the relevant tax office of the municipality where the property is located.
The service can be requested for both finished and unfinished property. This can be done either at the counter in the respective municipality or by requesting a tax assessment certificate online with a qualified electronic signature certificate or a qualified electronic signature. A very important clarification is that in order to use the online service, the user needs to have an account in the electronic service system.

What are the required documents?

Required documentation includes:

Deed - copy and original. The original is for reference purposes and the copy is attached to the application for assessment;
Certificate of heirs - only if the property was acquired by inheritance.

The tax office will provide you with a form to fill in, which you can also find online.

A peculiarity that is important to mention is that when issuing a tax assessment certificate relating to a property under construction, the application also needs to be accompanied by a finding report of the municipal (district) administration, which aims to certify the degree of completion of the building.

Also, in more and more municipalities you may be asked for a scheme / and a cadastral sketch if there is land attached to the property. And something of particular importance is if the current address of the property is different from the one described in your title deed, it is a good idea to have a certificate of identity of address or a certificate of current administrative address beforehand.

What to look out for in the tax assessment when buying a property?

Mistakes are often made when applying for a property tax assessment, which hinder the process and cause delays. This is why it is important to focus your attention on the most common inaccuracies.

Make a check to determine whether the property is in fact registered in the name of the last owner. This is essential as very often when buying a home the new owner forgets to declare it. If you are in such a situation, you need to complete and submit a declaration under Article 14 of the Local Taxes and Fees Act (LTFA);
If there is more than one owner, you need to check that the personal details - names and ID numbers - of each of them are listed. If any of them are missing, a new declaration under Article 14 of the LBTT must be submitted. Even if only one spouse's name is entered in the deed of a property acquired during marriage and without a declared regime of separation, the tax assessment must include both names. In many cases, however, the spouses are not aware of these details, but you should bear in mind that these circumstances are of particular importance as they render the certificate invalid;
Check that the square footage, the address of the property and the adjoining premises - basement and/or attic, which are recorded on the certificate, match the information recorded on your title deed. This is important because often seemingly small technical errors made by tax officials can lead to the transaction being refused. In case you find a discrepancy in the information, it is important to react promptly and request its correction. Keep in mind that you do not have to pay for a new tax assessment to be prepared, as the erroneous information is corrected by hand. The officer's signature and seal must be affixed to certify the correction;
Check specifically against each owner's name that they have NO liability for the property. If it appears that any do exist, they must be paid at the time, which will avoid the issuance of a new assessment. This again requires clarification by the officer, his signature and seal;
You will receive the valuation certificate in duplicate. It is important to know that both are originals. One is for the notary to use when the transaction is confirmed and the other is for the Registry Agency. Many owners appear at a transaction with only one copy, concluding that the other is for themselves.

What should we look out for in the tax assessment if we are selling a property?

To be as relaxed as possible, it is best to check if you have unpaid taxes and fees. This will save you a lot of effort and time when you proceed to the point of sale.
Check carefully for any mechanical errors in the document issued to you. As we have already mentioned, these can be both the details of the square footage, the address where the property is located, the presence of adjoining premises (attics and basements) and the validity period of the tax assessment.

What is the difference between tax assessment and market price?

The market price is the agreed price at which a property is sold, and the tax valuation serves as the basis for annual tax and council tax.
It is important to know that completing a transaction at the actual market price can save you future complications that may arise as a result of completing the transaction based on the tax assessment. Sometimes, however, both parties decide to record the transaction on the tax appraisal deed, reasoning that doing so will save them the additional costs. However, be aware that although this may seem like a perfectly logical solution, it carries negative consequences for both the buyer and the seller, as the action is a legal violation.

Keep in mind that the first 5 years after the transaction is consummated appear to be the riskiest in which the real estate can be taken. To be safe and secure, it is best to list the actual market price of the property. The problems you can create for yourself if you deliberately miss this circumstance will only waste you more time and money instead of the other way around.