Progressive Property Taxation: Owners of Multiple Properties May Face Higher Taxes Under Planned Reform

Owners of more than one home can breathe a sigh of relief this year, but from next year they may have to pay higher taxes on each additional property they own. The governing majority is working on such a proposal, citing fairness and the need to curb speculation in the property market as its main objectives. A draft of the 2026 State Budget is expected to be published next week.

The proposed new model for taxing residential properties according to the number owned rather than their market value did not initially appeal to Ivaylo Spasov, who owns two flats and a house.

Ivaylo Spasov, property owner:

“No one wants to pay higher taxes. But then again, no one wants to pay taxes at all. I suppose there could be a positive economic effect — people like me might decide what to do with their second and third properties instead of keeping them locked up. It could bring property prices down.”

At the opposite end of the debate is Dimitar Ivanov. He believes only those who own many properties should pay more, including politicians.

Dimitar Ivanov, property owner: “There are people who have worked their entire lives and chosen to invest in this way.”

- BNT: Do you think such a measure would generate more revenue for the state if taxes were increased?”

Dimitar Ivanov:
“No, it would not bring in any additional money.”

The governing parties do not dispute that view, as they have yet to specify what the measure's financial impact would be.

Konstantin Prodanov, Chair of Parliament’s Budget Committee:
“The idea is that a third, fourth and possibly subsequent property would carry a slightly higher tax burden than the previous one, in order to encourage people to buy property primarily for living in rather than for speculation, because, as you know, such trends do exist.”

Konstantin Prodanov:
“Our aim is not to target anyone. Rather, we are seeking fairness. I cannot provide specific figures at this stage. The measure would support municipalities.”

Atanas Pekanov, Deputy Prime Minister:
“This is a medium-term reform. It is not something that can be introduced within two or three weeks through the new budget. Over a longer period, we need to consider progressive taxation on second and third homes precisely because of the overheating of the property market.”

Although property transactions have declined since the beginning of the year, investors continue to build. The number of permits issued for new homes is rising, as is mortgage lending. Bulgaria currently has a total of 4,324,193 residential properties.

There is another obstacle to the new formula — the absence of a unified information system. Amid discussions about raising additional revenue, economists stress that attention should also be paid to how public funds are spent.

Assoc. Prof. Ralitsa Simeonova-Ganeva, economist:
“Regardless of whether we choose one tax or another, or one approach or another to increase revenues, we must pay attention to how public money is spent. We need to consider what we achieve with the funds we spend and whether we follow standards, principles and rules.”

Experts have also proposed revising property tax valuations or adjusting tax rates.