The government has lowered the ceiling for the VAT rate of 5% on the purchase of housing. Thus, from January 1, 2023, the maximum price level will be 600,000 lei (the equivalent of 120,000 euros), compared to 700,000 lei (the equivalent of 140,000 euros) as it is currently, for a dwelling of no more than 120 square meters. But there is also good news for future homeowners, but especially for small entrepreneurs in the field.
The government has provided as a transitional measure the application of the VAT rate of 5% for future dwellings worth up to 140,000 euros and with an area of 120 sqm if pre-contracts are concluded by January 1, 2023. After this date, a VAT rate of 19% will be applied for new homes, of over 120,000 euros.
This "legislative loophole" is to be taken into account first of all by families who want a larger home, for which from January 1, 2023 they can pay 14% more (the difference from 5% VAT to 19% VAT.
However, it creates a rare opportunity for small investors, and especially for individuals who have bank deposits that devalue every day as a result of bank costs and inflation. They can use their deposits to invest in dwelling units whose area will fall from 1 January under the VAT increase.
Practically, any person who concludes a pre-contract for the sale of a dwelling unit that today is worth up to 140,000 euros, will benefit from the first moment of 2023 from a 14% increase in its value by increasing the VAT!
This opportunity gives small investors a rare opportunity to be able to purchase housing units in real estate that, although they have high long-term growth rates, some even up to 30% in two years, were difficult to access for short-term speculation.
Case study: investment in Bucegi 12 Central Residence Ploiesti
Bucegi12 luxury office and apartment building is being built in the zero zone of Ploiesti, near the Palace of Justice and Mihai Viteazul Park. To better understand this mechanism and the immediate gain, we propose as a case study a two-room apartment in this building.
Now, a two-room apartment of about 65 square meters (built area) costs 128,000 euros, without VAT. Those who will conclude a pre-contract by December 31 will pay VAT of 5% and 6,400 euros, respectively.
After January 1, for the same apartment, the future owner will pay VAT of 19% and 24,320 euros, respectively. The result is a clear profit of EUR 17,920 per dwelling unit from the VAT difference alone.
Bucegi12 is a profitable and longer-term investment
In the context in which the analysts of the real estate market estimate for the next years increases of up to 30% in the values of the real estates in the "luxury" category, the positioning and endowments make Bucegi 12 Central Residence Ploiesti an attractive investment for long-term investors as well.
The building, which will have two underground levels of parking lots, anti-atomic bunker, above-ground parking lot and will rise on ten floors, is designed to withstand a 9.2-degree earthquake on Richter.
The endowments with state-of-the-art equipment in the field of air conditioning systems – it will be the first block in Ploiesti equipped with solar panels, heat pumps and partially ventilated façade, will lead to low maintenance costs and will give a spectacular aspect of the construction.
In addition, these standard facilities will transform Bucegi12 Central Residence into an architectural symbol of Ploiesti, which will reflect positively on the increase in the value of money invested in an office or apartment here.
Interested persons can find out further information by phone/watsapp: 0754 770 777 or 0723 226 060. They also have at their disposal both the e-mail address contact@bucegi12.ro and the mesenger of the project's Facebook page: https://www.facebook.com/Bucegi12CentralResidence.
What does GO 16/2022 provide on the amendment of the Fiscal Code
The Government Ordinance no. 16/2022, by which the Fiscal Code was amended, from January 1, 2023, provides in article 291: "the reduced rate of 5% of VAT will be applied for the supply of dwellings that have a usable area of maximum 120 sqm, excluding household annexes, whose value, including the land on which they are built, does not exceed the amount of 600,000 lei, excluding value added tax, purchased by individuals individually or jointly with another individual / other persons".
