Buying Real Estate in Montenegro: Investor’s Guide (2025)
The Montenegrin real estate market remains attractive for foreign investors due to the possibility of obtaining a residence permit (temporary residence) through property ownership. The “Citizenship by Investment” program has been closed since 2022, therefore purchasing property today is a path to residency, but not to a passport. Foreigners have the right to purchase residential and commercial real estate on the same terms as local residents. However, there are restrictions on land:
Important: To purchase land plots larger than 5,000 sq. m or agricultural land, a foreigner must register a local company (legal entity). There are also restrictions in border zones.
Transaction process: step-by-step guide
The procedure for registering ownership rights takes from 4 weeks to several months. Physical presence is not mandatory — the transaction can be completed remotely via power of attorney.- Property search. Main regions for investment: Budva, Tivat, Podgorica. Use local websites and agencies. Personal inspection and engaging an architect to assess the building’s condition are recommended.
- Reservation and verification. After agreeing on the price, a preliminary contract is signed and a deposit is paid (usually 10%). At this stage, it is mandatory to hire a lawyer for due diligence (transaction verification).
- Financing. Non-residents may obtain a mortgage from a Montenegrin bank: LTV (loan-to-value) up to 50%, term up to 25 years, rate 3–7%. It is also necessary to open an account in a local bank for settlements.
- Contract signing. The main sale and purchase agreement is signed before a notary exclusively in the Montenegrin language (a licensed interpreter is required). The notary verifies identities and the substance of the agreement.
- Payment. Payment of the remaining amount. For security, it is recommended to use an escrow account.
- Registration. After full payment, tax payment, and court certification, the notary submits documents to the Cadastre. Ownership transfers to you after the entry is recorded.
Lifehack: Total transaction costs amount to 6–9% of the property value. This includes notary services (0.01%), lawyer (about 1%), and agent commission (3–5%, but it is more often paid by the seller).
Taxes and maintenance costs
Montenegro’s tax system is favorable, but has nuances depending on the type of property (primary or secondary).- VAT (PDV) 21%: Applies to new buildings (first sale from the developer). Usually already included in the price. In this case, property transfer tax is not paid.
- Property transfer tax (3–6%): Paid by the buyer when purchasing secondary housing or land. The base rate is 3% of market value. For expensive properties (usually above EUR 150,000), a progressive scale applies.
- Annual property tax: Ranges from 0.25% to 1% of market value. The rate is determined by the municipality.
- In tourist zones, the rate for hotels may reach 5%.
- The tax is paid in two installments: by June 30 and by October 31.
- Capital gains tax: Upon resale, the tax is 15% for individuals (difference between purchase and sale price).
- Rental income tax: Rental income is taxed at 9–15% (withholding tax for non-residents — 9%).
Risks and how to avoid them
The market is developing, therefore insufficient property due diligence is the main investor mistake.
Main risks:
- Illegal construction: Lack of permits (upotrebna dozvola) may lead to fines, prohibition of use, or demolition. Always check zoning.
- Title issues: Outdated cadastre records (especially in villages) and unresolved inheritance issues.
- Hidden debts: Tax and utility debts may transfer to the new owner. Request a recent certificate of no outstanding debts.
Recommendation: Always hire a local lawyer (cost ~1% of the transaction). Saving on legal support often leads to loss of investment due to “dirty” documents.
Independent check: Cadastre (List Nepokretnosti)
You can conduct an initial property check yourself through the state online cadastre. This is free. Instructions for using ekatastar.me:- Go to the geoportal or cadastre website (ekatastar.me).
- Use the login and password: KORISNIK (for both fields).
- Select the municipality (Opština) and cadastral municipality (Katastarska opština).
- Enter the parcel number (Broj parcele) or the owner’s surname.
- Vlasnici (Owners): Make sure the seller is the sole owner or has consent from all co-owners.
- Tereti i ograničenja (Encumbrances): The most important section. Look for the words Hipoteka (mortgage), Dug (debt), Službenosti (servitudes) or court restrictions.
- Area and designation: Compare the actual condition with the documents. If the cadastre lists “livada” (meadow) but there is a house in reality, it is an illegal construction.