Finance

The Flat Tax: How to Tackle It

The proposal to introduce a flat tax has so far focused mainly on the effects on people’s incomes and the effects on the economy as a whole. It is interesting to see what will be the effect on real estate due to the dynamic development of this market in the country over the past three years. What happens with a flat tax (10% income tax, profit tax and social security contributions)? IME forecasts show that taxpayers’ incomes will increase significantly – an average family will increase their disposable income by about $ 1,700 per year.

For the Personal Incomes

With increasing personal incomes, consumers spend more on almost all goods and services, including real estate. This in turn will lead to increased demand for real estate and a corresponding increase in their price. Increase in savings. According to IME calculations, the taxation of citizens’ incomes and corporate profits will more than halve. This means that households will have more financial opportunities to save and hence to obtain housing loans. With the rapid development of lending in Bulgaria and maintaining the same or even lower growth rate of housing credit (taking into account the measures imposed by the BNB on banks), the ability of the borrower to collect so-called own participation (currently it is about 20-30% of the market price of the property). Using the income tax calculator is important there.

  • With stable incomes of the citizens and possibility for regular payment of the installments, this will be enough for granting a loan for acquiring a house that households will have more financial opportunities to save and hence to obtain housing loans. With the rapid development of lending in Bulgaria and maintaining the same or even lower growth rate of housing credit (taking into account the measures imposed by the BNB on banks), the ability of the borrower to collect so-called own participation (currently it is about 20-30% of the market price of the property).
  • The tax authorities will fill in a lot of information for you in advance. Handy, but check it carefully anyway. Has anything changed in your financial situation in the past year? Then there is a chance that your details are incorrect. Please note: the tax authorities do not always fill in any deductions for you in advance. This includes healthcare costs, gifts, retirement provisions and other specific deductible expenses incurred in 2019.

Divide the income and deductions

If you had a tax partner in 2019, you may divide your joint assets and deductible items in your tax return, so that it suits both of you best. This is attractive, for example, if one of you two falls into a higher tax rate. The person who has the highest income and therefore pays a higher rate can, for example, deduct the costs. You can shift the amounts so that you can see what is most beneficial for you.

 

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