Since January 1, 2024, Montenegro will raise the tax on purchases of real estate from €150,000. Such amendments were recently adopted by the country’s government.

How the new tax will be calculated, who it will affect, and what could lead to such changes were the topics discussed by Alina Artemyeva, a leading expert on working with clients of the real estate agency TradeGoria.

— In Montenegro, since the beginning of 2024, there will be a progressive tax on real estate turnover. It will especially affect buyers of premium-class objects. 

The calculation of real estate turnover tax starting in January 2024 will look as follows:

  • The tax rate for properties worth up to €150,000 will not change and will be 3%. 
  • For properties worth between €150,000 and €500,000, the tax will consist of two parts: €4500 in fixed taxes plus 5% of the difference in property value. 
  • New owners of secondary luxury real estate will have to pay a fixed rate of €22,000 and add 6% of the difference in value. 

That is, if the object is worth €500,000, the tax will be imposed on the difference (500 thousand-150 thousand), which is €350,000. And for the remaining €150,000, there will be a tax of 3%.

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— This change in the tax system could lead to an increase in demand for new buildings, as buyers who buy from a developer do not have to pay property turnover tax. In addition, this law may lead to a change in prices in the secondary real estate market.

What will happen to the dynamics of sales of luxury real estate? It is difficult to predict. It is possible that the introduction of the new tax can lead to stagnation in the market for premium-class real estate.

It is expected that the objects costing up to 150,000 euros will be most popular, while the premium market could slow down.