Apartment Investment in Bulgaria in 2026

An apartment is a worthwhile investment when its realistic net income after vacancy, tax, maintenance and management justifies the total capital invested and the risk taken. If it is financed, calculate cash flow after debt service and the return on your own invested equity separately.

Fact-checked on 12 August 2026. Market indicators are preliminary and change over time. This is general information, not individual investment or tax advice.

The four criteria

The decision does not begin with “Will prices rise?” Start with four testable criteria:

1.Return: what remains from rent after vacancy, costs and tax relative to the total investment.
2. Liquidity: how easily the property can be let or sold without a substantial discount.
3. Cost of ownership: which expenses recur whether or not the apartment is occupied.
4. Risk and horizon: what happens if it is vacant, requires repairs, faces higher interest or takes longer to sell.

Market appreciation does not automatically correct weak rent, an excessive purchase price or persistent negative cash flow.

Gross and net yield

Gross yield is a first-pass filter:

Gross yield at full occupancy = (monthly market rent × 12) ÷ purchase price × 100

It ignores vacancy, tax, maintenance and acquisition costs. For a realistic comparison, use:

Unlevered net yield = (expected annual rent collected − operating costs − tax) ÷ total acquisition investment × 100

Where:

- rent collected is rent after an allowance for vacancy and uncollected payments;
- operating costs include applicable local property charges, condominium costs, insurance, maintenance, management and other owner expenses;
- total acquisition investment includes the price, acquisition costs and necessary initial finishing or furnishing.

Tax on rental income

In the ordinary case of a Bulgarian-resident individual letting their own apartment on a long-term basis outside a business activity, acquired rental income is reduced by a 10% statutory expense allowance and the resulting taxable income is taxed at 10%. This produces tax equal to 9% of gross acquired rent before any personal adjustments. Short-term accommodation, business activity and special regimes may be treated differently. Bulgarian National Revenue Agency

Vacancy is a scenario, not a universal constant

Two vacant months reduce potential annual rent by 16.7%, but this is a stress assumption. Compare at least three cases:

Occupancy	Rent collected at €900 per month	Reduction from 12 months
12 months	€10,800	0%
11 months	€9,900	8.3%
10 months	€9,000	16.7%

 

Use evidence from actual contracts and genuinely comparable apartments, not the highest asking rent in a listing.

Buying with a mortgage

The net yield above measures the property independently of financing. A financed purchase requires two additional measures:

Annual cash flow after financing = rent collected − operating costs − tax − annual loan payments

Cash-on-cash return = annual cash flow after financing ÷ cash invested by the buyer × 100

Cash invested includes the down payment, acquisition costs and initial costs that are not financed. Repaid principal increases your equity but is not an operating expense in the same way as interest; cash flow and total economic return are therefore not the same figure.

Compare loans using the annual percentage rate of charge (APRC), the European Standardised Information Sheet and the repayment schedule—not only the advertised interest rate.

Liquidity and location

Check:

- achieved rents for comparable homes in the immediate area;
- typical time on market and repeatedly republished listings;
- transport, employment, education and daily services relevant to the target tenant;
- layout, natural light, floor, lift access and parking;
- condition, energy performance, common areas and planned building works;
- the development pipeline and supply of comparable apartments.

New construction is not automatically more liquid. Quality, common costs and local demand matter more than the “new-build” label.

Owner costs

Budget each applicable item separately:

- tax on rent received;
- annual property tax and municipal waste fee;
- condominium charges and repair-reserve contributions borne by the owner;
- property insurance;
- routine repairs and a replacement reserve for furniture and appliances;
- management and tenant-finding fees;
- legal, accounting or payment costs where applicable;
- vacancy and unpaid rent.

Do not use one universal percentage. Calculate every item for the specific building and strategy.

The municipal waste-fee regime is transitional in 2026 and is not uniform across Bulgaria. Some municipalities use new bases, while legislation allows a previous regime or amount to continue in specified circumstances. Check the relevant municipal council's decision and ordinance. ([State Gazette, issue 113/2025](https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=240166))

The market in 2026

According to preliminary NSI data, Bulgarian house prices rose by **6.2% quarter on quarter** and **14.8% year on year** in the first quarter of 2026. NSI, 24 June 2026 ; Eurostat, 2 July 2026

These figures describe a national index, not a particular district, building or apartment. Rapid purchase-price growth can compress rental yield when rents rise more slowly.

For financing context, consult the [Bulgarian National Bank interest-rate statistics](https://www.bnb.bg/statistics/stmonetaryinterestrate/stinterestrate/stirinterestrate/index.htm), but use the individual offer and APRC for the actual decision.

Risk and exit planning

Stress-test:

- 10, 11 and 12 paid months of rent;
- an unexpected repair;
- a variable-rate change;
- lower rent on the next tenancy;
- a discounted sale and longer marketing period;
- selling costs and mortgage deletion;
- the tax treatment of any gain on sale.

Model weak, base and strong exit scenarios without treating future appreciation as guaranteed. The price you are prepared to pay today is your strongest controllable variable.

Worked example

This example demonstrates the method; it is not a forecast.

Assumptions: price €200,000; acquisition and initial furnishing costs €16,000; total investment €216,000; rent €900; 11 paid months; operating costs before tax €1,500; tax at 9% of rent received in the ordinary case described above.

Gross yield at full occupancy:** (€900 × 12) ÷ €200,000 × 100 = **5.40%.

Unlevered net yield with 11 paid months:

- rent collected: €9,900;
- tax: €891;
- net operating income: €9,900 − €1,500 − €891 = €7,509;
- net yield: €7,509 ÷ €216,000 × 100 = **3.48%**

Scenario	Paid months	Net operating income*	Net yield*
Strong	12	€8,328	3.86%
Base	11	€7,509	3.48%
Stress	10	€6,690	3.10%

\* Using €1,500 operating costs and 9% tax on rent received.

For a mortgage purchase, subtract the annual payments in the individual repayment schedule to obtain cash flow, then divide it by the buyer's actual cash invested.

Frequently asked questions

Is an apartment a worthwhile investment in Bulgaria in 2026?

Only if the specific numbers work. National price growth does not guarantee a return on an individual property. Calculate rent after vacancy, all owner costs, tax, total capital invested and—if financed—cash flow after the loan.

How is rental yield calculated?

Gross yield divides twelve monthly rents by the purchase price. Net yield uses realistically collected rent, deducts operating costs and tax, and divides the result by the total acquisition investment.

How is rental income taxed in Bulgaria?

In the ordinary case of a Bulgarian-resident individual letting outside a business activity, acquired rental income is reduced by a 10% statutory allowance and the balance is taxed at 10%—equal to 9% of gross acquired rent before personal adjustments. Special regimes require a separate check.

How should a mortgaged investment be evaluated?

Evaluate the property without financing first. Then calculate cash flow after all loan payments and the return on the buyer's cash. Compare loans by APRC, terms and repayment schedule.

What are the principal risks?

Vacancy, non-payment, repairs, variable interest, concentration in one asset, changes in local rules, lower future rent and a discounted sale.

Sources

1. NSI — Housing Price Statistics, Q1 2026 24 June 2026.
2. Eurostat — House prices, Q1 2026 2 July 2026.
3. Bulgarian National Revenue Agency  Rental income.
4. Bulgarian National Bank  Interest-rate statistics
5. State Gazette, issue 113/2025