Moldova may introduce VAT on the sale and rental of residential real estate, as well as increase the tax on profits from the sale of housing. True, this will not affect all transactions. NM tells what tax innovations the authorities are preparing in the real estate sector, and why market players criticized them.
VAT on the sale and rental of housing
The draft fiscal policy (NBP) for 2027, presented by the government for public consultation, involves the introduction of VAT on the sale of residential real estate, as well as on its rental.
VAT on housing will apply only to new real estate, that is, to apartments that are sold for the first time after the building is put into operation. Upon subsequent resale of the apartment, VAT will not be applied. In addition, if the contract for the purchase of real estate is concluded this year, and payments will be made in subsequent years, VAT will also not be applied.
VAT on real estate rental will only affect legal entities engaged in this type of activity. “This is so that legal entities do not have a large number of apartments. This is state policy: apartments should be owned by families, not legal entities,” Finance Minister Andrian Gavrilitsa told NM.
However, he noted that he does not believe that the introduction of VAT will automatically lead to an increase in prices for new buildings by 20%. “This is not true. In any construction, building materials are used, which are purchased with 20 percent VAT already included. A significant part (of building materials) includes VAT. There is no place for growth of 20%,” Gavrilitsa said.
For individuals, the tax rate on rental property will remain the same – 7%.
Increase in capital gains tax
The NBP project also involves increasing the tax on capital gains, that is, on the profit you receive if you sell real estate or another asset for more than you bought it for. The current tax rate is 6% for non-principal residences and 0% for primary residences.
It is proposed to exempt the first million lei of capital gains from the sale of the main residence. For amounts above this limit there will be a 15% rate. For non-main residences, a tax of 15% will be levied on the first lei of capital gains.
Simply put, if a few years ago you bought an apartment for 1 million lei, and now its market value has increased to 3 million lei, then the capital gain on its sale will be 2 million lei.
Currently, if this is your main residence and you have been registered at this address for more than three years, you do not have to pay tax. If we are talking about a second or third apartment, then from an increase of 2 million lei it is necessary to pay 6%, that is, 120 thousand lei.
If the new rules come into force, then when selling a primary residence, the first million of the gain will be exempt from tax, and the 15% tax will be charged only on the second million. In this case, the tax amount will be 150 thousand lei. If housing that is not the main one is sold, the tax will be 300 thousand lei – 15% of the increase of 2 million lei.
Adrian Gavrilitsa believes that the new system will not lead to an increase in housing prices. “What’s wrong with the current system? Someone built a house at a cost of €100 thousand and wants to sell it for €200 thousand. For a legal entity this is a tax of about 17% (12% income tax and 6% tax on dividends on the remaining amount), but you can register the property to an individual and pay only 6%,” Gavrilitsa noted in an interview with NM.
What market players say
The patronage federation of builders, road workers and construction materials manufacturers Condrumat criticized these tax measures. Condrumat argues that the proposed measures could hit the construction sector and lead to higher housing prices.
“The measures proposed in the draft NBP for 2027 go beyond simple fiscal intervention and have a direct impact on the economic development model promoted by the state. Exemption from VAT on the resale of housing, an increase in capital gains tax (15%), taxation at a rate of 15% of capital gains from the sale of own housing (for amounts exceeding 1 million lei), an increase in the tax on dividends, etc. will hit the end consumer, who will pay a higher price per square meter, and will also jeopardize the development of the construction industry, especially in the residential segment,” the federation believes.
In addition, Condrumat believes that new tax measures could reduce interest in real estate investment, reduce construction volumes and negatively affect manufacturers of building materials, causing a chain reaction for the labor market and business.
As a result, the federation demanded that progress on tax changes be suspended pending independent analysis and consultation with the business community, and that the calculations on which the measures are based be published.
Earlier, the Union of Real Estate Agencies also criticized tax policy.
“At a time when access to housing is already increasingly difficult, these changes could create additional pressure on citizens and further depress the real estate market,” the union said in a statement. It also noted that any tax reform must take into account market realities and the consequences for people, not just budgetary calculations.
“We urge the authorities to have real consultations with representatives of the real estate market before adopting these amendments,” stated in the Union of Real Estate Agencies.
Also next year, property taxes are likely to increase significantly. You can read about this in detail Here.
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