Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy (RON/EUR/USD considerations)
• Research historical EUR/USD or EUR/CAD exchange rates (most properties are priced in Euros)
• Set up international wire transfer capabilities with your home bank
• Consider opening a Romanian or EU bank account (increasingly challenging for non-residents)
• Evaluate tax implications in both Romania and your home country
• Explore financing options if needed (typically limited for non-residents)

Market Research

• Identify target cities based on investment goals (capital growth vs. rental yield)
• Research neighborhood-specific price trends and rental yields
• Join online forums for Romania property investors (Romania-Insider, Expat groups)
• Subscribe to property market reports (Romania-Insider, Colliers, CBRE)
• Analyze infrastructure projects and EU-funded development zones
• Research tenant demographics and rental demand in target areas
• Plan a preliminary market visit to evaluate areas firsthand

Professional Network Development

• Connect with English-speaking Romanian attorneys specializing in real estate
• Identify reputable real estate agencies with experience helping foreign buyers
• Research property management companies in your target market
• Establish contact with currency exchange specialists
• Find a Romanian-based tax accountant familiar with non-resident investor concerns
• Connect with building inspectors for property assessments
• Consider translation services for legal documents

Expert Tip: The Romanian property market is highly seasonal, with spring (April-June) and fall (September-October) being the most active periods. Winter months (December-February) often see reduced activity and potentially motivated sellers, while summer can be slow due to extended holiday periods. Consider timing your property viewing trip strategically to align with market activity in your target region.

Recent Regulatory Change: Since 2023, Romania has simplified the process for establishing an SRL, reducing the minimum share capital requirement and implementing a streamlined online registration process. However, all companies are now required to declare their beneficial owners in the Romanian Beneficial Ownership Register as part of EU-wide transparency measures. Non-compliance carries significant penalties, making professional assistance essential for proper setup.

Banking Setup

• Romanian Bank Account Options:
  • Romanian banks: Major providers include BCR (Erste Group), BRD (Société Générale), Transilvania Bank
  • International banks with Romanian presence: ING, Raiffeisen, UniCredit
  • Digital banking alternatives: Revolut, Wise, N26 (offer EUR accounts usable in Romania)
• Typical Requirements:
  • Passport/identification
  • Romanian fiscal identification number (NIF)
  • Proof of address (both home country and Romanian if available)
  • In-person appointment (for most traditional banks)
  • Initial deposit (varies by bank)
  • Additional KYC documentation for larger transactions
• Alternative Approach: Many foreign investors complete property transactions without a Romanian bank account by using notary escrow accounts for the purchase and then setting up property management with international transfer arrangements.

Financing Options

While cash purchases are common among foreign investors, financing options include:

1. Romanian Mortgages for Foreign Nationals:
   • Availability: Limited and selective, primarily for EU residents
   • Deposit Requirements: Typically 25-40% for foreign buyers
   • Interest Rates: 5-7% (higher than for Romanian residents)
   • Term: Usually up to 20-25 years
   • Income Requirements: Proof of stable, documentable income, typically from EU sources
   • Documentation: Extensive, including income verification, credit history, and work permits if applicable
2. Developer Financing:
   • Some developers offer payment plans for new constructions
   • Typically requires 30-50% down payment
   • Limited to new build properties
   • Terms generally shorter than bank mortgages (3-5 years)
   • Often higher interest rates than bank financing
3. Home Country Financing:
   • Refinancing existing properties in North America
   • Home equity lines of credit (HELOCs)
   • Personal loans or portfolio-secured credit lines
   • Often more accessible than Romanian financing for non-EU citizens
   • Currency exchange risk considerations

Currency Management

Romania presents unique currency considerations as most property transactions are conducted in Euros, while the official currency is the Romanian Leu (RON):

• Multiple Currency Considerations:
  • Property prices typically quoted in Euros
  • Legal transactions recorded in RON (at exchange rate on transaction date)
  • Operational expenses typically in RON
  • Monitor EUR/RON, USD/EUR and USD/RON trends to identify favorable exchange windows
• Currency Services:
  • Specialized services like Wise, Revolut, or OFX typically offer better rates than banks
  • Forward contracts can lock in exchange rates for large transfers
  • Multi-currency accounts simplify property management
• Income Repatriation:
  • Rental income typically collected in RON or EUR
  • Consider timing of transfers to optimize exchange rates
  • Be aware of bank charges for international transfers
  • Maintain accurate records for tax purposes in both countries

Currency management is particularly important in Romania due to historical RON volatility. While the currency has stabilized in recent years, significant movements can still occur, especially during economic or political uncertainty. The three-currency dynamic (USD/CAD to EUR to RON) requires careful planning to minimize exchange costs.

Property Search Resources

• Online Property Portals:
  • Imobiliare.ro – Romania’s largest property portal
  • Storia.ro – Popular platform with extensive listings
  • Anuntul.ro – Classified ads including direct-from-owner properties
  • OLX.ro – Marketplace with property listings
• Real Estate Agencies:
  • International agencies: RE/MAX, Coldwell Banker, Century 21
  • Local networks: ImobiliareFOO, Euroest, Premier Imobiliare
  • Note: Unlike North America, exclusivity agreements are less common; a property may be listed with multiple agencies
• Developer Direct:
  • Major developers like One United, Impact Developer, Anchor Group
  • Often offer pre-construction purchasing opportunities
  • Sales offices in major developments and shopping centers
• Specialized Resources for Foreign Buyers:
  • Property shows in major European cities
  • Expat-focused real estate consultants
  • Relocation companies with property services
  • Online forums like Romania-Insider and expat Facebook groups

Property Viewing Trip Planning

For overseas investors, an efficient property viewing trip is essential:

1. Pre-Trip Research:
   • Identify 10-15 potential properties before arrival
   • Contact agents to verify availability
   • Research neighborhoods thoroughly online
   • Arrange meetings with attorneys and other professionals
2. Trip Logistics:
   • Plan at least 3-5 days per city being considered
   • Consider hiring a driver/translator if you don’t speak Romanian
   • Schedule viewings in geographical clusters
   • Leave time for neighborhood exploration at different times of day
3. During Viewings:
   • Take detailed photos and videos
   • Ask about building age, renovations, and infrastructure
   • Inquire about association fees and building management
   • Check utilities, heating systems, and energy efficiency
   • Note proximity to transport, amenities, and noise sources
4. Post-Viewing Assessment:
   • Review top choices with a local real estate attorney
   • Request property documents for preliminary review
   • Consider a second viewing of finalist properties
   • Validate pricing against comparable properties

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Proximity to public transportation (metro in Bucharest)
  • Walking distance to amenities (shops, markets, parks)
  • School catchment areas (for family rentals)
  • Safety and reputation of neighborhood
  • Planned infrastructure developments
  • Major employers and universities nearby
• Building Quality:
  • Construction period and quality (communist-era vs. post-2000)
  • Seismic risk classification (particularly important in Bucharest)
  • Thermal insulation and energy efficiency rating
  • Utilities infrastructure (district heating vs. individual heating)
  • Building management and maintenance quality
  • Renovation history and condition
  • Quality of common areas and facilities
• Rental Potential:
  • Local rental yields for similar properties
  • Tenant demographics and demand in the area
  • Seasonal factors (especially for tourist areas)
  • Potential for short-term vs. long-term rentals
  • Competition from new developments
  • Furnishing requirements and costs
• Financial Considerations:
  • Price per square meter compared to area average
  • Association fees and maintenance costs
  • Property tax assessment
  • Utility costs (particularly heating in winter)
  • Potential capital appreciation based on local trends
  • Marketability for eventual resale

Expert Tip: For properties in Bucharest, seismic risk classification is critical. Buildings are rated from Class I (highest risk) to Class IV (lowest risk). Class I and II buildings (identified by red circular symbols) should generally be avoided for investment purposes due to safety concerns, insurance challenges, and potential for mandatory retrofitting requirements. This classification system is unique to Romania and unfamiliar to most foreign investors, making local expert advice particularly valuable.

Legal Due Diligence

• ✓
  Land Book Extract: Verify current ownership and any registered encumbrances
• ✓
  Title History: Research previous ownership and potential restitution claims
• ✓
  Cadastral Documentation: Confirm property boundaries and registered area
• ✓
  Fiscal Certificate: Verify no outstanding property taxes or fees
• ✓
  Building Permits: Confirm legal construction and any modifications
• ✓
  Zoning Verification: Check allowed uses and future development plans
• ✓
  Owners Association Documents: Review regulations, meeting minutes, planned expenses
• ✓
  Utility Contracts: Verify connections, capacity, and payment status

Physical Due Diligence

• ✓
  Professional Property Inspection: Assess structural integrity, systems, and overall condition
• ✓
  Seismic Risk Assessment: Verify building’s classification and structural safety
• ✓
  Energy Performance Certificate: Review energy efficiency rating and improvement needs
• ✓
  Heating System Assessment: Evaluate type, efficiency, and maintenance costs
• ✓
  Building Infrastructure: Check elevators, roof, facades, and common systems
• ✓
  Internet Connectivity: Test speeds and available providers
• ✓
  Environmental Assessment: Identify pollution, noise, or natural hazard risks

Financial Due Diligence

• ✓
  Comparative Market Analysis: Verify price against recent comparable sales
• ✓
  Rental Market Research: Confirm realistic rental expectations with local agents
• ✓
  Tax Assessment: Calculate property tax and transaction tax liability
• ✓
  Building Fee History: Review past owners association fee increases
• ✓
  Utility Cost Analysis: Obtain average costs for electricity, heating, water
• ✓
  ROI Calculation: Develop detailed cash flow projections and return analysis

Expert Tip: Romania’s property registration system (cadastre) is undergoing modernization but remains incomplete in some areas. Always verify that the property has been fully registered in the electronic land book system (carte funciară electronică) and has received a cadastral number. Properties without proper registration can face delays and complications during transactions. Additionally, be particularly thorough when researching properties that changed hands during the post-communist privatization era (1990s), as title irregularities from this period can sometimes surface years later.

Offer and Negotiation

1. Make an Offer: Typically done verbally through the real estate agent
2. Negotiation: Price negotiations, often with significant flexibility (5-10%)
3. Verbal Agreement: Initial terms agreed upon (not legally binding)
4. Pre-Contract Preparation: Legal representatives begin drafting preliminary contract

Unlike North America, verbal offers in Romania are considered preliminary discussions. The transaction only begins formal legal process with the signing of a pre-contract (promissory agreement). Prices are typically listed in Euros but may be negotiated and are legally recorded in Romanian Lei (RON).

Transaction Process

1. Engage Legal Representation: Hire a Romanian attorney specializing in real estate
2. Initial Due Diligence:
   • Preliminary land book check
   • Verification of seller’s identity and ownership
   • Initial property documentation review
3. Pre-Contract (Antecontract):
   • Legally binding agreement to complete the sale
   • Specifies property details, price, and completion timeframe
   • Typically requires a deposit (10-30% of purchase price)
   • Outlines conditions for contract fulfillment or termination
4. Comprehensive Due Diligence:
   • Complete legal and technical investigations
   • Resolution of any issues discovered
   • Preparation of final sale documentation
5. Notary Selection:
   • Appointment of public notary to authenticate the transaction
   • Preparation of final contract documents
   • Calculation of notary fees and transaction taxes
6. Final Contract Signing:
   • Both parties present at notary office (or via power of attorney)
   • Payment of balance (typically via bank transfer or notary escrow)
   • Signing of authenticated sale-purchase contract
   • Payment of notary fees and transaction taxes
7. Land Book Registration:
   • Notary submits documentation to land book office
   • New ownership registered (typically 2-4 weeks processing)
   • Final land book extract issued confirming ownership transfer
8. Post-Completion:
   • Utility contract transfers
   • Property tax registration update
   • Owners association registration (for apartments)
   • Insurance arrangement

The timeframe from initial offer to completion typically ranges from 30-90 days, with the pre-contract to final contract period usually taking 30-60 days. For foreign buyers, additional time should be allocated for fiscal number registration and international payment processing.

Transaction Costs

Budget for these typical transaction expenses:

• Notary Fees:
  • Progressive scale based on property value
  • Typically 0.5-1% for properties above €50,000
  • Includes authentication and land book registration
• Property Transfer Tax:
  • Flat fee of 0.1% of property value
  • Based on either contract value or tax assessment value (whichever is higher)
• Land Book Registration:
  • 0.15% of property value (usually included in notary fees)
  • Additional fees for expedited processing if needed
• Real Estate Agent Commission:
  • 2-3% of property value (typically paid by seller, but negotiable)
  • May be higher for properties specifically marketed to foreign buyers
• Attorney Fees:
  • Typically 1-1.5% of property value for foreign buyers
  • May be structured as flat fee plus success fee
• Technical Documentation:
  • Energy performance certificate: €100-200
  • Cadastral documentation updates (if needed): €200-500
• Translation Services:
  • €100-300 for legally certified translations of documents
• Value Added Tax (VAT):
  • 19% VAT applies to new build purchases from developers
  • Does not apply to purchases between individuals
  • Reduced 5% VAT rate available for properties under €140,000 meeting specific criteria

Total transaction costs for foreign investors typically range from 3-6% of the purchase price, with new build purchases potentially including additional VAT. These costs should be factored into your overall investment calculations.

Expert Tip: For foreign buyers unable to be present in Romania during the entire transaction process, a power of attorney can be arranged allowing your legal representative to sign documents on your behalf. This should be prepared in advance, as it needs to be notarized and apostilled in your home country to be valid in Romania. Some notaries may still request the buyer’s presence for the final contract signing, so clarify this requirement early in the process.

Administrative Tasks

• ✓
  Property Tax Registration: Register with local tax authority (typically handled by notary)
• ✓
  Utility Transfers: Change electricity, gas, water accounts to your name
• ✓
  Owners Association Registration: Register with building management for apartments
• ✓
  Property Insurance: Arrange building insurance (required for mortgaged properties)
• ✓
  Internet/Telecommunications: Set up services with local providers
• ✓
  Building Access: Arrange keys, access cards, parking permits
• ✓
  Property Management: Engage management services if property will be rented

Regulatory Compliance

Rental properties in Romania must comply with several regulations:

• Energy Performance Certificate:
  • Required for all rental properties
  • Must be renewed every 10 years
  • Information must be included in rental advertisements
• Fire Safety Requirements:
  • Functioning smoke detectors (required by law)
  • Fire extinguishers for larger properties
  • Ensuring emergency exits are accessible
• Tax Registration:
  • Registration as rental income source with tax authority (ANAF)
  • Annual tax declarations
  • VAT registration if income exceeds threshold (currently 300,000 RON annually)
• Tourist Accommodation Registration:
  • Required for short-term/holiday rentals
  • Classification certificate from Tourism Authority
  • Local tourism tax collection responsibilities
• Tenant Registration:
  • Non-EU tenants must be registered with Immigration Office
  • Rental agreements should be registered with tax authorities

Compliance requirements have increased in recent years, particularly for short-term rentals in tourist areas and major cities. Professional property management can ensure all regulatory requirements are met, particularly important for foreign owners managing remotely.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Property Documents:
  • Final sale-purchase contract (authenticated by notary)
  • Land book extract confirming ownership
  • Cadastral documentation
  • Property tax certificates
  • Energy performance certificate
  • Building permits and technical documentation
• Financial Records:
  • All property-related expenses with receipts
  • Owners association payment receipts
  • Utility bills and payment confirmations
  • Insurance policies and payments
  • Rental income and contracts
  • Currency exchange documentation
• Tax Documentation:
  • Annual tax returns (Romania and home country)
  • Property tax payment receipts
  • Capital improvements documentation (for future capital gains calculations)
  • Rental income declarations
• Tenant Information:
  • Rental agreements
  • Tenant identification
  • Deposit records
  • Property inventory and condition reports
  • Correspondence regarding maintenance

Romanian tax authorities require records to be kept for at least 5 years. Digital record-keeping systems with secure backups are strongly recommended, particularly for overseas investors managing properties remotely. Most Romanian property management companies now offer online portals for document storage and financial reporting.

Expert Tip: Consider having key property documents translated and officially certified in English. While not legally required, having these documents readily accessible in your native language can facilitate remote management, future financing, or eventual sale. Additionally, establish a system to monitor annual property tax assessments (which are not always automatically sent to foreign addresses) to avoid potential penalties for missed payments.

Romanian Tax Obligations

• Property Transfer Tax:
  • 0.1% of property value paid at purchase
  • Typically included in notary fees
  • Based on either contract value or tax assessment value (whichever is higher)
• Annual Property Tax:
  • 0.08%-0.2% for residential properties (rate set by local authorities)
  • 0.2%-1.3% for commercial properties
  • Based on tax assessment value (often lower than market value)
  • Due in two equal installments (March 31 and September 30)
  • 10% discount typically available for full payment by March 31
• Rental Income Tax:
  • 10% flat tax rate on net rental income
  • Standard expense deduction of 40% available
  • Alternatively, actual expenses can be deducted with proper documentation
  • 10% health insurance contribution required on rental income exceeding 12 minimum wages
  • Annual tax return filing required by May 25 following the fiscal year
• Capital Gains Tax:
  • 10% on net gains from property sold within 3 years of acquisition
  • Properties held longer than 3 years with value under 450,000 RON (~€90,000) are exempt
  • For properties above 450,000 RON held more than 3 years, 3% tax applies on amount exceeding threshold
  • Declaration and payment required within 30 days of sale
• Value Added Tax (VAT):
  • 19% standard rate applies to new property purchases from developers
  • Reduced 5% rate for qualifying residential properties under €140,000
  • VAT registration required if short-term rental income exceeds 300,000 RON annually

Home Country Tax Obligations

Romania has tax treaties with both the United States and Canada which help prevent double taxation. However, the interaction between tax systems is complex and requires professional guidance from advisors familiar with both jurisdictions.

Tax Planning Strategies

• Entity Structure: Evaluate whether personal ownership or Romanian company (SRL) optimizes tax position
• Expense Documentation: Maintain detailed records of all deductible expenses
• 40% Standard Deduction: Consider whether standard deduction or itemized expenses is more advantageous
• VAT Threshold Management: Monitor rental income to avoid exceeding VAT registration threshold
• Capital Improvements: Document all capital expenditures which may reduce future capital gains tax
• Holding Period Planning: Consider 3-year holding period threshold for capital gains exemption/reduction
• Treaty Benefits: Ensure proper application of tax treaty provisions to avoid double taxation
• Property Value Thresholds: Consider 450,000 RON threshold for capital gains planning

Romanian tax rules for real estate have undergone significant changes in recent years, with further adjustments likely as the country continues to align with EU standards. Regular consultations with Romanian and home country tax professionals are essential to ensure continued compliance and optimal structuring.

Expert Tip: Romania’s electronic tax filing system (SPV) now allows non-residents to register and manage their tax affairs online. Setting up access to this system can significantly simplify tax compliance, especially for foreign investors managing properties remotely. Additionally, the 40% standard expense deduction for rental income is often more advantageous than tracking actual expenses unless you have substantial documented costs like major renovations or property management fees.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with Foreign Investors:
  • Track record with international clients
  • English language proficiency
  • Understanding of non-resident tax obligations
• Professional Credentials:
  • APAIR membership (Romanian Association of Real Estate Agencies)
  • Professional indemnity insurance
  • Company registration and licensing
• Market Knowledge:
  • Specialization in your property type/location
  • Understanding of local rental market trends
  • Established tenant network
• Client Communication:
  • Regular reporting frequency and format
  • Online portal for remote access
  • Responsiveness to international time zones
• Maintenance Network:
  • Reliable contractors for repairs
  • Emergency response procedures
  • Transparent fee structure for works
• Financial Management:
  • International payment options
  • Rent collection efficiency
  • Detailed accounting practices

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Scope of Services: Detailed description of exactly what is included and excluded
• Fee Structure: Clear explanation of all management fees, commissions, and additional charges
• Contract Term and Notice Period: Duration of agreement and how to terminate
• Reporting Schedule: Frequency and format of financial and property condition reports
• Maintenance Authority: Spending limits for repairs without prior approval
• Tenant Selection Criteria: Parameters for approving potential tenants
• Rent Collection Procedures: Methods, timing, and handling of arrears
• Insurance Requirements: Coverage expectations and liability boundaries
• Legal Compliance: Responsibility for regulatory compliance and tax declarations
• International Payment Arrangements: Currency conversion and transfer procedures

Request references from current clients, particularly other overseas investors, before signing with a property management company. This provides valuable insights into how they handle properties for remote owners.

Expert Tip: The property management industry in Romania has evolved significantly in recent years, with more specialized services emerging. For vacation rentals in tourist areas like Brasov or the Black Sea coast, look for managers with expertise in dynamic pricing and multiple booking platforms. For long-term rentals in cities like Bucharest and Cluj, prioritize managers with strong corporate connections for expat tenants, who typically offer higher rents and longer tenancy periods.

Exit Options

Sale Process

When selling your Romanian property:

1. Pre-Sale Preparation:
   • Property presentation and staging
   • Address maintenance issues
   • Gather all relevant documentation
   • Consider vacant possession vs. tenanted sale
2. Agent Selection:
   • Local expertise in your property type
   • Marketing strategy for your target buyer
   • Commission structure (typically 2-3%)
   • Experience with international seller transactions
3. Pricing Strategy:
   • Comparative market analysis
   • Consider pricing in Euros vs. RON
   • Negotiation margin expectations
   • Potential buyer financing considerations
4. Marketing Period:
   • Professional photography and floor plans
   • Online and offline marketing exposure
   • Viewings coordination
   • Offer negotiation
5. Sale Process:
   • Pre-contract (antecontract) negotiation
   • Buyer due diligence period
   • Final contract preparation by notary
   • Contract signing and authentication
   • Fund receipt and exchange
   • Property handover
6. Post-Sale Requirements:
   • Tax declaration within 30 days
   • Capital gains tax payment
   • Currency repatriation
   • Utility contract transfers
   • Tax authority notification

The Romanian selling process typically takes 2-3 months from listing to completion, though this can vary based on market conditions, property type, and buyer circumstances. Foreign sellers should plan for potential delays with international payment processing and additional documentation requirements.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Romanian Property Cycle: The market is still maturing, with historically higher volatility than Western European markets, but increasingly showing more stable growth patterns
• Currency Exchange Rates: Monitor EUR/USD or EUR/RON trends; a strong Euro significantly enhances returns when converting back to home currency
• EU Integration Milestones: Romania’s progression in EU integration (potential Eurozone entry, Schengen completion) can trigger significant market movements
• Tax Optimization: Consider the 3-year capital gains exemption threshold for residential properties below 450,000 RON
• Infrastructure Completion: Major infrastructure projects (highways, airports, metro extensions) can significantly impact nearby property values upon completion
• Seasonal Factors: Spring (April-June) and fall (September-October) typically see highest buyer activity and best pricing
• Regional Development: Monitor EU funding cycles and major development initiatives that may boost specific regions
• Portfolio Balance: Consider Romanian property exposure relative to overall investment portfolio

The most successful investors establish clear performance benchmarks and regularly evaluate their Romanian property investments against both local and international alternatives. The market’s relatively early stage of development compared to Western Europe suggests potential for continued appreciation as the country’s economy converges with EU standards, but with potentially higher volatility requiring strategic timing.

Expert Tip: If selling a property that you’ve owned for more than 3 years, remember that properties valued below 450,000 RON (approximately €90,000) are exempt from capital gains tax. For properties above this threshold, only the amount exceeding the threshold is taxed at 3%. Timing your sale to take advantage of this exemption or reduced rate can significantly impact your overall return. Additionally, considering selling in Euros rather than RON can simplify the transaction for foreign buyers and potentially expand your market of interested purchasers.