Everything About Buying Your First Property, VAT Refunds and Tax Exemption

· · Tips for Buyers

✅ New incentives for first-time property buyers in 2025 – everything you need to know about VAT refunds and tax exemption

Buying your first property is one of the most important financial and life decisions. Thanks to the new measures of the Croatian Government, it is now much easier for young people and families to get their own home, with significant savings. Since 1 January 2025, two key tax reliefs have come into force:

  • 50% VAT refund on the purchase of a first property in a new build
  • 3% exemption from real estate transfer tax on a first property

In this blog post we provide an overview of all the conditions, limits and examples, so you know who is entitled to the incentives, how to claim them and what to look out for when buying.

🧾 1. Exemption from the 3% Property Transfer Tax

What is changing?

Buyers purchasing their first property no longer pay the 3% property transfer tax that was previously charged on resale (pre-owned) properties. This measure applies retroactively from 1 January 2025.

Who is eligible?

  • People buying a property in Croatia for the first time
  • Must be under 45 years of age
  • The measure applies to all types of property (apartments, houses, land) purchased as a first home
  • Applies to both resale and new properties, including those outside the VAT system

How much can you save?

For example, if you buy an apartment worth €150.000, without this measure you would have to pay €4.500 in tax. This measure removes it entirely – and leaves that money in your pocket.

🧾 2. 50% VAT Refund on a First New-Build Property

This may be the most significant measure of all – especially for those targeting a new build.

What exactly is on offer?

The state refunds half of the VAT already included in the property price if you buy a new property from a developer or a legal entity registered for VAT.

As VAT in Croatia is 25%, this means the buyer gets back approximately 12,5% of the property price.

Who is eligible?

  • A private individual who: Is buying their first property Is under 45 years of age Is buying a new build from a VAT payer Meets the price and floor area requirements (see below)

How do you apply?

  • The application is submitted to APN (the Agency for Legal Transactions and Real Estate Brokerage)
  • Application deadline: within 24 months of signing the purchase agreement
  • Payment is made after the full amount has been paid and ownership has been registered

💶 3. Price Limits – How Much Can a Square Metre Cost?

The right to a VAT refund is not unlimited – limits have been introduced to favour buyers of affordable rather than luxury properties.

How is the limit determined?

  • The price per m² must not exceed 150% of the average price of apartments in the local government unit (city/municipality)

Examples

  • Zagreb – Average price (€/m²): €3.051 – Maximum for refund (€/m²): €4.576
  • Split – Average price (€/m²): €3.624 – Maximum for refund (€/m²): €5.436
  • Osijek – Average price (€/m²): €1.678 – Maximum for refund (€/m²): €2.517
  • Zadar – Average price (€/m²): €3.050 – Maximum for refund (€/m²): €4.575
  • Bjelovar – Average price (€/m²): €1.044 – Maximum for refund (€/m²): €1.566

If the property price is above the upper limit, the buyer loses the right to a refund.

If the price falls between the average and the 150% limit, the refund is calculated on the average price, not on the actual price.

📏 4. Floor Area – How Large an Apartment Can You Buy?

In addition to the price limit, there is also a floor area limit, based on the number of household members.

  • 1 person – Base floor area: 50 m² – Maximum with tolerance (+50%): 75 m²
  • 2 people – Base floor area: 65 m² – Maximum with tolerance (+50%): 97,5 m²
  • 3 people – Base floor area: 80 m² – Maximum with tolerance (+50%): 120 m²
  • 4 people – Base floor area: 95 m² – Maximum with tolerance (+50%): 142,5 m²
  • 5 person – Base floor area: 110 m² – Maximum with tolerance (+50%): 165 m²
  • 6+ people – Base floor area: +15 m² per person – Maximum with tolerance (+50%): +50%

Examples

  • A young single person buys a 80 m² apartment → ❌ not eligible (apartment too large)
  • A couple with a child buys a 115 m² apartment → ✅ eligible (below the limit)
  • A family of 4 buys a 150 m² house → ✅ eligible (below 142,5 + tolerance)

📌 5. Other Conditions and Restrictions

Obligation to use the property

The property must be used as a residence, specifically as your permanent home. Renting out, selling or handing it over to third parties is not permitted.

5-year ban on disposal

You must keep the property for at least 5 years. Otherwise, you are obliged to repay the VAT refund received and/or the amount of tax you avoided.

One property per household

Only one property can be covered by the measure – if you have already used APN, a subsidy or similar state measures, you may not be eligible.

🏡 6. What Does It All Look Like in Practice?

Example 1 – The Ideal Case

  • A young person (28 years old) buys an apartment in Zagreb (new build)
  • Price: €3.100/m², 60 m² (total €186.000 including VAT)
  • Below the price and floor area limits → ✅ eligible
  • VAT refund: approx. €18.600
  • 3% exemption: €5.580
  • Total savings: €24.180

Example 2 – Price Too High

  • A couple buys a 110 m² apartment in Split at a price of €6.000/m²
  • The price exceeds the limit (€5.436/m²) → ❌ not eligible

📈 7. What Does This Mean for the Property Market?

These measures will certainly:

  • Boost demand for new builds
  • Further increase interest in apartments within the price cap
  • Speed up sales of apartments up to 100 m² in urban areas
  • Increase pressure on agencies to educate buyers about the rules

💼 8. Tips for buyers and agents

For buyers

  • Get informed before signing the contract
  • Check whether the price per m² is within the cap
  • Pay attention to the floor area and the number of household members
  • Be sure to plan to use the apartment as your permanent residence

For agents

  • Stay up to date with the regulations and prices set by each local government unit
  • Help clients understand the caps
  • Highlight apartments that are "within the limit"
  • Communicate clearly how much can realistically be saved

✅ Conclusion

The incentives that came into force in 2025 can mean the difference between a buyer moving into their own home or remaining a tenant. With a 50% VAT refund and an exemption from the 3% tax, you can save up to €25.000 on the purchase of your first property.

But as always, the devil is in the details. Price, floor area, number of household members and deadlines all need to be monitored carefully. With the right advice, an agent who knows what they are doing and a quick response, the 2025 measures could be the most profitable decision of your year.

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