How Can I Become the Owner of a Candy Brick Villa?
The final cost of a Candy Brick villa is €360,000. Once you have decided on your villa, you can reserve your real estate investing by signing the purchase agreement and paying an initial 10% reservation deposit. When the villa is successfully completed, ownership will be transferred over to you on the payment of the balance.
You can purchase a Candy Brick villa either as a private person or as a company. We recommend you opening a d.o.o. (private limited) company in Croatia for the following reasons:
- It is very fast, only taking a few days to establish, and is relatively cheap, costing around €1,000 to incorporate and €1,000 in annual management costs;
- Companies with an income lower than 3 million Croatian kuna (HRK) only pay 12% corporate tax. After deducting your costs (including depreciation13), it amounts to about 2.4% of your rental income (€720);
- You won’t have to pay VAT which is an additional 25% (€87,500) in Croatia. It is reimbursed by the government within 30 days. If you can’t cover this amount for 30 days, we can offer you an interest free loan to cover it;
- You can avoid tax on dividend if you loan your company the amount to buy the villa via an interest free loan, and pay yourself back steady interest free loan repayments.
- Price of your villa: €360,000
- Rental Guarantee income: €30,000
- Full Rental and Management service: €6,000
- Annual depreciation cost: €18,000 (5%)
- Profit before tax: €6,000
- Tax expense: €720
- Profit after tax: €5,280
- Cash in bank account: €23,280
- Return on investment: 8.33% before costs and taxes, 6.47% after. 53% higher than the Croatian average14.
Please note, these calculations have been made excluding other marginal and communal costs, such as your water and rubbish collection, that you can use to reduce your profit before tax. We have also not included the additional income you could make from selling the excess electricity your solar panels make to the grid. This could be between €3-4 a day when the villa is not in use. In the future this income could increase up to 10x should the government reintroduce feed-in tariffs. Nor have we included the benefit of spending 2 weeks for free in your villa, worth €2,500 (excluding July and August).
For financing, if you need it, the best thing to do is contact your bank. Your bank knows your specific situation and will offer the best solution according to your needs. Getting a mortgage for your villa in Croatia is also possible from a Croatian bank. Most banks will offer up to 60%. But, it is possible to get up to 80% with the support of the local enterprise office. We would be more than happy to introduce you to our partner bank in order to analyse your options. If you already own another property, you may be able to use it to secure a loan in your home country.
13Accounting practice. It is the lifetime charge of the purchase price of your villa taken from as a cost from your income statement. Normally 5% of the total value of the villa (€17,500) for 20 years. Don’t worry though, your villa will actually appreciate, just be happy for the less tax you will pay!