More and more first homes in Bulgaria are bought with help from parents — towards the deposit, part of the price or all of it. Usually the money is simply transferred and nobody thinks about it again. But the way parents hand over the money decides whether tax is due, what the bank will ask, who owns the home and what happens to the money if your marriage ends. There are three main options: a cash gift, a loan and a share in the property.
Option 1: a gift of money
This is the most common and the simplest route. The parents transfer the money to their child, and the child pays the seller.
- Gift tax: under the Local Taxes and Fees Act, gifts between relatives in the direct line (parents, children, grandparents, grandchildren) are not taxed. The same applies to gifts between spouses.
- Income tax: money received as a gift is not taxable income under the Personal Income Tax Act and is not reported in the annual return.
- Form: the law does not require a notarial form for a gift of money. Still, sign a short written gift agreement — with the date, the amount, both parties' IBANs and an express statement that the money is given for the purchase of a specific home. It is your evidence for the bank, for a court and for the other heirs.
A warning if you are married. If the parents give the money to "the young couple" or to both spouses, the part received by the son- or daughter-in-law is not a direct-line gift — the local tax on it is between 3.3% and 6.6%, depending on the municipality. It also becomes his or her money. If the aim is for the help to stay with your child, the gift should go to your child alone, into his or her own account.
Option 2: a loan from the parents
Sometimes parents want the money back — because it is their retirement savings, for instance, or because there are other children to think of.
- Loan agreement: sign a written agreement setting out the amount, term, repayment schedule and interest (it can be interest-free). For extra certainty the signatures can be notarised, which puts the date beyond dispute.
- Reporting to the NRA: loans between individuals whose outstanding balance at year-end exceeds the statutory threshold must be reported in the annual tax return — by both the lender and the borrower (Art. 50(1)(5) of the Personal Income Tax Act). Any agreed interest is taxable income for the parent.
- The bank: for a mortgage the bank looks at your total debt. A loan from your parents is one more liability, and the bank may want to know where your deposit comes from. Say so openly at the start — a last-minute surprise does more damage than the loan itself.
A loan protects the parents better than a gift: if the child divorces, the money is a debt that must be repaid, not a present to be divided.
Option 3: the parents become co-owners
The third route is for the parents to buy an undivided share of the home with their own money, while the child buys the rest with savings or a mortgage.
- Upside: what they put in remains their property, visible in the notarial deed.
- Downside: every sale, mortgage or alteration needs the signatures of all co-owners. If a bank finances the purchase, the parents usually have to join as mortgagors or co-applicants.
- Inheritance: one day the parents' share will pass to all of their heirs, including the child's brothers and sisters. That is often the reason to choose this option — or to avoid it. How a share is sold and when co-ownership ends in a division is covered in our guide to co-owned property.
If the parents already own a home and want to transfer it outright, that is a gift of property — with different rules and costs, set out in our guide to gifting property to relatives.
Protection on divorce: what the Family Code says
If you buy during a marriage, the home is presumed to be joint (marital community property), whoever's name is on the deed. There are two exceptions:
- property acquired by gift or inheritance is personal (Art. 22 of the Family Code);
- property bought entirely with personal funds is also personal, and where personal funds paid only part of the price, the corresponding share is personal (Art. 23).
Money the child received from the parents as a personal gift counts as personal funds. But a court will want evidence that this particular money paid the price. So:
- Make the gift to the child alone, by bank transfer, with a clear payment reference.
- Send the money straight to the purchase — ideally from the same account to the seller, without mixing it with salaries and joint savings.
- The notarial deed can state that the price is paid with personal funds received as a gift; the other spouse can also confirm this in a declaration.
- Keep the gift agreement, bank statements and payment orders for as long as the marriage lasts.
The property regimes and how to prove personal funds are explained in detail in our guide to spouses and property.
How to choose: a quick comparison
| Gift | Loan | Co-ownership |
|---|
| Tax | none between parents and children | none; interest is the parent's income | local transfer tax on the purchase, as in any sale |
| Document | written gift agreement | written loan agreement | notarial deed naming the parents as buyers |
| The bank | accepts it as your deposit | counts it as a liability | parents take part in the mortgage |
| On divorce | personal, if proven | a debt to be repaid | the share belongs to the parents |
| Flexibility | high | medium | low — every signature needed |
Practical tips
- No cash. Property payments go by bank transfer — that keeps a clean trail for the bank and for the tax authorities.
- Document it before the deal, not after. An agreement signed years later is far less convincing.
- Talk as a family. If there are other children, agree openly whether the help is a gift or an advance on the inheritance — it saves disputes later.
- Run the numbers. See how much you would still need to borrow after your parents' help with our mortgage calculator.
In short
- Gift — simplest, tax-free between parents and children; make it to the child alone and put it in writing.
- Loan — protects the parents, including on divorce; reported to the NRA above the threshold.
- Co-ownership — the parents stay owners, but every decision needs their signature too.
- Whatever you choose — bank transfer, a clear payment reference and documents kept safe.
If you are planning a purchase with your parents' help, call us or come into the office — we will look at your case together, help you with the bank and prepare the deal so that the help ends up where it was meant to go.
This information is general and does not replace individual legal or tax advice. Verified as of October 2026.
