Property regulations and taxes for foreigners – comparative analysis | imi.

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Somewhere in the world, right now, a foreigner is buying an oceanfront apartment, another a house in an Alpine village, and yet another a modest home in a Bulgarian resort. Foreign investment in real estate is nothing new. It is everywhere, shaping city landscapes, driving economies, but also causing social and political unrest. And it sometimes raises difficult questions — should countries restrict access to their property markets to foreigners? What is the effect on local people when city center apartments are bought not for living but for investment? Canada is an interesting example. In 2022, the authorities there literally said "stop" to foreigners wanting to buy homes. A serious spike in prices, especially in Vancouver and Toronto, made young Canadians feel squeezed out of their own market. In response, a two-year ban was introduced, as well as a special tax for owners who do not live in the homes they purchased. The policy was controversial, but the goal was clear - stability and affordability for locals. On the other side of the world, New Zealand took similar action back in 2018. It banned the purchase of existing homes by foreigners. This does not mean that the country is closed - foreign investment is welcome, but only if it leads to the construction of new buildings and real economic benefit. In this way, the government tried to avoid a scenario in which entire neighborhoods turn into "ghost towns" full of expensive but uninhabited properties. Portugal, for its part, was for many years a symbol of an attractive destination for foreigners. The "golden visas" were a hit - in exchange for a certain investment, most often in real estate, a person could receive the right to reside. And everything seemed great, until prices in Lisbon and Porto began to soar at an incredible rate. It became increasingly difficult for locals to afford a home, and protests became more frequent. So the program was terminated - the state realized that no matter how profitable this strategy was, it had a high social cost. Germany is another interesting case. There are no restrictions there — foreigners can freely buy property, without the need for visas or special conditions. However, the market remains relatively stable. The reason is in the culture and regulations. Germans traditionally prefer to live in rent, the laws strongly protect tenants, and construction is under constant control. There is no need for bans — the system itself discourages speculation. England has also long been a magnet for the world's wealthy. London, the world's showcase, was filled with luxury apartments, often uninhabited. The authorities responded by imposing higher taxes on foreigners and second homes. The effect? Prices remain high, and it remains difficult for locals to buy a home. The question remains: is tax policy enough, or is more drastic measures needed? Now let's turn to Bulgaria. In our country, the rules are relatively liberal. EU citizens can buy freely, and those outside the union - with some restrictions, which are often circumvented by registering a company. The tax system is the same for everyone - foreigners and Bulgarians pay the same. This makes Bulgaria attractive for investment, especially from Western Europeans who are looking for cheap properties by the sea or in the villages. The effect on the market in our country is milder than in other countries, but it exists. There are entire complexes along the Black Sea coast that are empty for most of the year. In some villages, especially in Northern Bulgaria, there is a rise in prices, driven by the interest of foreigners - mostly British and Russians. Sofia and Plovdiv are feeling the pressure, but it is mainly from local demand, not so much from foreign capital. This presents us with a dilemma. Do we want to encourage foreign investment? Of course. But at what cost? Do we need additional tax mechanisms to limit speculative purchases? Is it possible to stimulate the construction of housing for permanent residence, not just for seasonal use? Can we support young Bulgarians to stay in the country through affordable housing, instead of competing with foreign capital? The truth is that Bulgaria still has a chance to avoid the negative scenarios that other countries have already experienced. But this requires proactive policy. Transparency. Tax incentives for those who actually live here. And regulations that protect the public interest without chasing away investors. The real estate market is not just about economics. It is a social fabric that connects people to the places they live. If we lose that connection, everything else becomes irrelevant. Maybe it's time to look beyond the numbers and ask ourselves a simple question: do we want cities full of life, or just buildings full of capital?