Tax refund for the purchase of the first property is starting

New regulations that bring significant novelties for young buyers of the first property in Croatia are soon coming into force. These incentives have been talked about for a long time, and now it is time for them to see the light of day. According to them, Croatian citizens under the age of 45 will be able to get a refund of value added tax (VAT) and real estate transfer tax when buying or building their first property.

How does the VAT refund work?

According to the new regulations, if you are under 45 and buying or building your first property, you can get a refund of up to 50% of the VAT paid. This applies to all sales made after January 1, 2025. This means that everyone who meets the conditions will be able to get a refund, which will reduce the initial cost of buying or building. This measure is a real step towards easing the financial burden for young people who want to become owners of their first apartment or house.

Real estate transfer tax refund

Another benefit that comes with the new regulations is the refund of real estate transfer tax, which will be paid in full. This means that young buyers who are buying real estate for the first time will not have to pay real estate transfer tax, which further reduces the initial amount that was previously required to be invested in the purchase.

Conditions for obtaining support

In order to be entitled to a refund of tax and VAT, certain conditions must be met. One of the key conditions is the size of the purchased property, which must be harmonized with the number of people in the household. For example, for one person, the minimum area of ​​the apartment is 50 m², but deviations of up to 50% are allowed, which means that you can buy an apartment up to 75 m², and the VAT refund will be calculated according to the area of ​​50 m². For the purchase of a house, the permitted area will be larger - a single person can buy a house up to 112.5 m², while for a family with more members, the square footage can be proportionally larger.

In addition, the price of the property must be within the average price per square meter for your local self-government unit. For example, for an apartment in the center of Zagreb, the average price per m² is 3051 euros, while the maximum price, with permitted deviations, can be up to 4575 euros per m².

Read more about the conditions here.

What do you need to attach to the request?

The request for tax and VAT refund is submitted to the Agency for Legal Transactions and Real Estate Brokerage (APN). Applications can be submitted within 24 months from the date of conclusion of the purchase agreement, and the following must be attached to the application:

• Copy of identity card
• Purchase agreement concluded after January 1, 2025.
• Extract from the land register
• Certificate of residence registration for all household members
• Proof of tax or VAT payment
• Account number to which the refund is requested

For the construction of a family house, it is necessary to attach a use permit, a construction contract, invoices for design and supervision, an excerpt from the land register and proof of sale of the previous property if the applicant had one.

Obligation to return support

It is important to note that there is an obligation to return support if the user sells, rents or moves out of the purchased property before five years have passed. If it is determined that the user does not meet the conditions, APN will order the return of the funds paid, which aims to prevent abuse of the system.

The new regulations come into force next Thursday and bring significant financial assistance to young people who want to buy their first property. After the Ordinance is published in the Official Gazette, citizens will be able to submit requests to APN for a refund of real estate transfer tax and half of the VAT with the necessary documentation.