Understanding real estate tax in Montenegro is essential whether you’re buying, holding, renting, or selling. This guide explains the property transfer tax, VAT on new builds, annual property tax, rental income tax, and capital gains tax—with clear examples so you can budget accurately and compare Montenegro real estate opportunities with confidence.
Snapshot: what buyers and owners actually pay
- Resale purchases: Progressive Real Estate Transfer Tax (RETT) of 3% / 5% / 6% based on price brackets (effective 1 Jan 2024).
- New builds (first sale by developer): 21% VAT applies instead of RETT.
- Annual ownership: Property tax 0.25%–1.00% of market value (set by municipality; billed annually).
- If you rent out: Rental income tax 15%, with standard cost deductions (typically 30% for long-term leases; higher standard deductions are available for registered tourism lets).
- When you sell at a profit: Capital gains tax 15% on the net gain.
Property transfer tax (RETT) on resale purchases
From 1 January 2024, Montenegro applies a progressive RETT scale on secondary (resale) transactions:
- Up to €150,000: 3%
- €150,000–€500,000: €4,500 + 5% of the amount above €150,000
- Over €500,000: €22,000 + 6% of the amount above €500,000
Worked example: On a €250,000 resale apartment, RETT = €4,500 + 5% × (€250,000 – €150,000) = €9,500.
Who pays? The buyer. RETT is typically settled around completion as part of the notary/municipal process.
Quick rule: Resale = RETT; confirm the exact figure with your notary or lawyer before signing.
VAT on new builds (first transfer)
Buying directly from a developer on the first transfer of a newly built unit triggers VAT at the standard 21% and no RETT. Developers usually price units VAT-inclusive in the sale contract—always confirm in writing.
Quick rule: New build (first sale) = VAT (21%); resale = RETT (3–6%). Compare properties net of tax to avoid apples-to-oranges decisions.
Annual property tax (ownership)
Owners pay annual property tax within a national band of 0.25%–1.00% of market value, with the exact rate set by the local authority. Bills are issued annually and are commonly payable in two instalments.
Planning example:
- At 0.4%, a €220,000 apartment ≈ €880/year.
- At 0.8%, a €220,000 apartment ≈ €1,760/year.
Always check the current municipal decision before finalizing budgets.
Rental income tax (long-term and tourist rentals)
If you rent out your property in Montenegro:
- Personal rental income tax is 15%.
- You can deduct documented actual costs or apply standard costs.
- Typical long-term residential leases: 30% standard cost.
- Registered tourism rentals may qualify for higher standard cost deductions (commonly 50% or 70%, depending on the category).
Example: You earn €18,000 gross from seasonal rentals and qualify for a 70% tourism standard cost → taxable base €5,400; tax at 15% ≈ €810. Confirm your exact category and paperwork with your accountant.
Capital gains tax when you sell
When you sell property for more than your adjusted cost, capital gains tax of 15% applies to the net gain (sale price minus purchase price and eligible improvement/transaction costs). Keep notary/legal invoices and renovation receipts to lower your taxable gain.
Compliance & timing checklist
- At purchase:
- Resale: RETT is assessed around completion by the notary/municipality.
- New build: VAT is part of the developer invoice/sale agreement.
- During ownership: Expect an annual property-tax assessment and payment windows each year (often two instalments).
- If you rent: File personal income tax accordingly; apply the correct standard-cost category (long-term vs. tourism) or deduct actual expenses with documentation.
FAQs
Do I pay both VAT and RETT on a new build?
No. First transfer of a new build = VAT (21%) only. RETT applies to resale purchases.
How much is transfer tax on a €520,000 resale?
€22,000 + 6% × (€520,000 − €500,000) = €23,200.
When is annual property tax due?
Billed once per year by the municipality; commonly payable in two instalments.
Can a non-resident offset renovation costs against capital gains?
Yes—keep invoices and proof of payment for eligible improvements and transaction costs.
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