How to buy real estate in Montenegro and obtain its citizenship

Montenegro is a country with a growing tourism sector, a stable economic situation, and a favourable tax policy. More and more investors are buying real estate in Montenegro because of its low tax rates. Annual property taxes range from 0,25% to 1% of the property value, while rental income and capital gains are charged at 9%.

The Covid‑19 pandemic had a negative impact on Montenegro’s real estate market: the flow of tourists and the percentage of real estate purchases decreased. But the building processes continued, and today the situation has improved. According to Monstat, the average price per sqm for an apartment in a new building rose to €1,380, which is an 11,5% increase year-on-year.

In the first quarter of 2022, the inflow of foreign investment in real estate in Montenegro amounted to €158.89 million. This is a 140,78% growth compared to the same period last year.

The average cost of new real estate in Podgorica, Montenegro’s capital, has reached €1,225 to €1,683 per sqm in 2021, depending on the district. These prices are almost 7% higher than in 2020. In the secondary market, the average cost is €870 to €1,150 per sqm.

In the second quarter of 2022, the average cost for new residential buildings in Montenegro reached €1,375 per sqm, according to the Statistical Office of Montenegro. But prices are not homogeneous around the country: in the capital, it is €1,393 per sqm; in the coastal region — €1,473, in the central region — €611, and in the northern — €915.

The most popular areas for buying real estate in Montenegro are coastal cities, the capital, and mountain towns. To participate in the investment program and get citizenship, you should choose a property worth €250,000 or more.

Case Study: Montenegro citizenship for a big family. Which property did the investor buy?

However, if you wish to buy real estate located in the capital or by the seaside, the minimum cost for the property is €450,000.

Coastal cities. Buying real estate in popular tourist cities, such as Bar, Budva, Tivat, or Kotor, has a great potential for rental income. These cities have access to the Adriatic coast and many options for sale.

Capital. Another good option is to buy a property in Podgorica, the capital of Montenegro, and at the same time the business and administrative centre.

There are many neighbourhoods in Podgorica: Podgorica I and Podgorica II are the municipalities with the most expensive real estate in the capital, which include Preko Morace, Gorica, and block 6 districts.

Mountain towns. Kolašin is the largest ski resort in Montenegro. This small town in the northeast of Montenegro has a wonderful view of the mountains. There are many good properties for sale.

Apartments. In Podgorica, the capital of Montenegro, you will find multi-story buildings. Along the coast, there are complexes with swimming pools and access to the beach.

Townhouses. These are houses that were built relatively recently, with an area of about 2,000 square metres. They are usually located outside the city centre.

Villas. There are many options for buying villas in Montenegro. They are usually larger than townhouses and may have a walled garden. You can buy a new or old one and renovate it to your liking. The villas are popular with tourists and can be rented out profitably.

Foreign investors are allowed to buy real estate but not land in Montenegro. It means you can purchase apartments easily. But you can’t just buy a private house because it goes with the land.

Yet, there is a way out: they can buy it through a company. It means a foreigner needs to register a company in Montenegro and conduct a transaction through it if they wish to purchase land.

There is also an exception. If the land has an area of fewer than 5,000 sqm and the building is subject to the contract of divestiture, for example, gift or exchange, a foreigner can make a purchase on their own behalf.

There are several steps that a foreigner should take to buy property in Montenegro.

Select a property to buy. Finding a property in Montenegro is not a problem; many attractive options exist. But to choose something reliable, it is better to hire an agent. The lawyer should check that the property is suitable for sale and for participating in the citizenship program, if applicable.

Make an offer. When the property is selected, you need to make an offer to the seller. Sometimes the price can be negotiated, but first, discuss it with a lawyer. When you have agreed on the price, it is better to make an offer in writing.

Pay a deposit. You have to pay 10% of the purchase price for the property to be taken off the sale.

Prepare a Sales and Purchase Agreement. Both parties sign this agreement, but you, as the buyer, pay for its notarization by a Montenegro public notary.

The agreement usually includes the following information:

• buyer’s name;

• seller’s name;

• the total amount the property was sold on;

• the specific terms on which the contract was signed;

• date and signature of both sides.

Pay for the property. When the main contract is signed, you have to pay the purchase, taxes, and fees.

Foreigners can take a loan from a Montenegrin bank for real estate purchases. When you sign a mortgage agreement, the money will be automatically transferred to the seller’s account after the transaction is completed. The transaction will be faster if you previously opened an account in a Montenegro bank.

Loan amounts vary depending on the banks; some will offer a mortgage up to €400,000, but others offer only €200,000. The loan terms are usually 240 or 300 months, which is equal to 20 or 25 years, respectively. The interest on bank loans is about 5%.

If you buy a property by participating in the investment program, you cannot take out a mortgage to conduct a transaction.

Taxes and fees when buying property. The buyer must pay a transfer tax of 3% within 15 days after the purchase. Otherwise, a fine of 0,03% will be charged for each day during the specified period. The Value Added Tax (VAT) of 19% has to be paid for the transfer of the newly built real estate, which is included in its price.

Notarization is mandatory for sale and purchase contracts. The notary fees reach 0,01% of the real estate value. The lawyer’s fees usually range from €100 to €1,000 per transaction.

General taxes and purchase fees can add 3,1% to the cost of an old property and 19,1% to the cost of a new house.

Tax from rental income. Income from renting out real estate is included in the total taxable income and is taxed at a fixed rate of 9%. The tax base for it is calculated by deducting the property’s maintenance costs or 40% of the gross income.

Taxes when selling property. Capital gains you receive from selling real estate are taxed at a fixed rate of 9%. This tax depends on the corresponding expenses, acquisition, and improvement costs.

Buying a property in Montenegro is a good investment from different sides.

The opportunity to obtain citizenship of Montenegro. Buying a property in Montenegro is not only a cost-effective investment but also makes it possible to get a passport of one of the European countries for the whole family.

The government of Montenegro launched a citizenship program by investments in July 2018. There is no need to live in the country or take a language proficiency test.

The second passport of Montenegro allows foreigners and their families to spend holidays in the country at any time or move to live there permanently.

Ample travel opportunities. Foreigners who have received a Montenegrin passport under the investment program get visa-free access to 124 countries, including the countries of the Schengen area.

Visa-free countries for Montenegro citizens

Investors also gain access to the E‑2 Visa in the United States. The visa holders can freely enter and leave the country and also have the opportunity to move to the US to operate a business.

Profit from renting. Buying a property in Montenegro, you can rent it out and return some of the investment. Montenegro is a country with actively developing infrastructure, including the tourism sector. Tourists choose Montenegro for its good service, low prices, beautiful scenery, and high level of ecology. Therefore, you will have an excellent opportunity to rent an apartment out. The rental yield in the country ranges from 4 to 6% per annum.

The mild climate and beautiful landscapes. Montenegro has a pleasant climate at any time of the year. Investors and their families can spend their holidays enjoying the mild weather and stunning views.

In summer, the average temperature is from +19 to +25 °C in mountainous areas and from +23 to +25 °C in coastal regions. In winter, the temperature ranges from +3 to +7 °C.

Montenegro has magnificent landscapes: warm sea, forests, canyons, mountains, waterfalls, rivers, and numerous lakes.

An investor can apply for the Montenegro citizenship program alone or with a spouse and children under the age of 18 and older if they are financially dependent on the applicant.

Montenegro grants citizenship to those investors who meet the conditions of the investment citizenship program: make a non-refundable contribution to the state fund of Montenegro in the amount of €200,000 and buy pre-approved by government real estate in hotels or resort complexes worth €250,000. If a property is located in the capital or by the seaside, the minimum cost is €450,000.

• €200,000

  Contribution to the state fund

• €250,000

  Minimum property cost when buying real estate in the central or northern region

• €450,000

  Minimum property cost when buying real estate in the capital or the coastal region

The process of obtaining a passport usually takes from 6 months after submitting the documents. Participation in this program grants citizenship regardless of the citizenship of another country, which means that if your home country allows dual citizenship, you can have two passports.

The contribution to the state fund is non-refundable. The property can be sold in the future.