What happens to the VAT on apartments contracted in 2022 and to be completed in 2023?

According to Ordinance No. 16/2022 of July 15, 2022, starting in January 2023, the Tax Code will again undergo changes regarding the purchase of residential properties subject to VAT 5%. Consequently, the maximum threshold will be adjusted.

Who will be eligible for the 5% VAT rate when purchasing a home in 2023?

The new year also brings new changes to the Tax Code. Starting next year, the threshold above which a 5% VAT rate applies to real estate purchases will be reduced to 600,000 lei.

While in 2022 a 5% VAT rate was applied to properties valued at up to 700,000 lei (approximately 140,000 euros), starting next year, this rate will apply to residential properties with a floor area not exceeding 120 square meters and a value not exceeding 600,000 lei (approximately 120,000 euros). Furthermore, while this year there was no limit on the number of apartments purchased for up to 450,000 lei, starting in 2023, each person will be entitled to a single purchase subject to the 5% VAT rate for a property valued at up to 600,000 lei.

What happens to people who have purchased a property during the construction phase?

Changes to the Fiscal Code could scare those who have already signed a preliminary sale-purchase agreement and paid a deposit for a future home that will be completed in 2023. However, there is no reason to panic. If the property exceeds 600,000 lei, it can be purchased with 5% VAT, provided it does not exceed the value of 700,000 lei (this year's maximum ceiling).

The 5% VAT rate remains in effect for anyone who has signed or signs a contract and pays a down payment for a property in 2022, even if they take possession of the home next year. Therefore, all apartments that have been contractually reserved, with a down payment made and VAT applied under the 2022 terms, will benefit from the same conditions when the final purchase agreement is signed.

Buying an apartment off-plan – a double win!

Difficult moments are ideal moments for investments. Therefore, whether you want a home or a medium-to-long term investment, contracting a property by the end of 2022 will bring you gains.

If you sign a contract for an apartment that is still under construction, you stand to gain twice: 14%—the VAT difference for 2023—plus a lower price than at the time of completion.

We can do a quick calculation, using a 2-room apartment in Greenfield Băneasa as a model, which currently has a price of 126,612 Euro, before VAT.

Calculated in 2022, the price of the apartment with VAT included would be 132,942 Euros.

The same product will have, in 2023, a price of over 158,200 Euros, taking into account both the increase in the VAT ceiling and the price at the time of the property's completion. Therefore, you can earn over 25,000 Euros in just a few months from contracting.

Don't forget: this is your last chance to buy a 2-room apartment with 5% VAT, in Greenfield.

Schedule a viewing, and let's discuss your future home in detail, as well as the 2023 changes in the real estate market.