Rental Yield on an Apartment in Central Sofia: A Real-World Calculation for 2026

Gross vs Net Yield: The Difference Investors Often Overlook

How Gross Yield Is Calculated

Gross yield (%) = (Annual rent / Purchase price) x 100. For an apartment priced at BGN 400,000 with monthly rent of BGN 1,600 (BGN 19,200 per year), the gross yield is 4.8%. This figure shows the return before any expenses and taxes. It is useful for quick property comparisons, but it is not a realistic measure of profitability.

What Net Yield Includes

Net yield takes account of rental income tax (10% on 90% of the rent received for individuals), municipal waste fee and annual property tax, repairs and furniture depreciation, vacancy periods, and any management fee when the property is rented out through an agency. For a good apartment in central Sofia with a low vacancy rate, realistic net yield is between 3% and 4.5% per year.

Market Rents in Central Sofia by Apartment Type

The figures below are indicative and are based on publicly available portals (imot.bg, alo.bg, investor.bg) from late 2025 to early 2026. The actual rent achieved in a specific transaction depends on the finish level, furnishing, parking and the exact address.

Apartments with a parking space in the centre command rent roughly EUR 100 to 150 higher than comparable properties without parking. Parking is a standalone market advantage.

Rental Income Tax: How It Is Calculated

Tax Calculation for a Long-Term Rental

At monthly rent of EUR 1,000 (about BGN 1,956), annual income is around BGN 23,472. Statutory deductible expenses are 10%, so the taxable base is 90% = BGN 21,125. Tax is 10% = about BGN 2,113 per year, or around BGN 176 per month. If the property was acquired with a mortgage, interest on the loan is not deductible from the taxable base for individuals.

Declaration and Deadlines

Rental income is declared in the annual tax return under Article 50 of the Personal Income Tax Act, filed by 30 April of the following year. The return may be submitted online, in person at a National Revenue Agency office, or by post. For the payments themselves, the safest option is a bank transfer or written evidence between the parties confirming the amount received.

Costs That Reduce Net Yield

Municipal Waste Fee and Annual Property Tax

The municipal waste fee and annual property tax are yearly obligations of the owner. The specific amount depends on the property’s tax valuation and the applicable Sofia Municipality rates. The waste fee is assessed separately.

Furniture Depreciation and Repairs

A rental apartment with furniture requires periodic replacement of appliances, furniture and minor repairs. A realistic estimate is 1% to 2% of the furniture value per year, plus between 0.5% and 1% of the property value for repairs over roughly 10 to 15 years. For shorter planning horizons, allow at least BGN 1,000 to 2,000 per year for these costs in a new apartment.

Management Fee When Letting Through an Agency

For a long-term tenancy, agencies usually charge one month’s rent as a one-off fee for finding a tenant. For full property management (rent collection, communication with the tenant), the fee is around 10% of the monthly rent. If you manage the property yourself, these costs fall away.

Vacancy Periods

For a quality apartment in central Sofia, vacancy periods are relatively rare because supply is limited and demand is stable. A realistic allowance for a long-term rental is between 5% and 8% of annual rent (roughly 3 to 4 weeks per year). For a new apartment in a good location, the figure is usually at the lower end.

A Real Example with Actual Numbers

If the property was acquired with a mortgage, the loan interest is not included in the calculation above because it shows the property’s yield rather than the return on equity. With a 20% down payment and 80% mortgage financing, the return on equity can be materially higher through leverage.

How the Address Affects Rent and Occupancy

Proximity to Metro and Office Areas

Higher-income tenants - employees of international companies, consultants and diplomats - value accessibility to the workplace above all. An apartment within walking distance of a metro station or a major office area rents faster and more consistently than a comparable apartment without that advantage.

Pirotska Residence is close to metro stations (Serdika, Lavov Most) and to key office and administrative addresses in the city centre. These factors directly affect occupancy and achievable rent.

Parking as a Rent Multiplier

In central Sofia, parking is a chronic shortage. An apartment with an included parking space commands rent around EUR 100 to 150 per month higher than a similar property without parking. On an annual basis that is EUR 1,200 to 1,800 in additional income, against an investment of about BGN 15,000 to 20,000 for a parking space in a new building.

Long-Term vs Short-Term Rental in Central Sofia

Advantages of Long-Term Rental

A long-term tenancy with a contract of at least one year provides stable monthly income, less wear and tear on the property and lower operating costs. With a tenant who has a good profile - stable income and references - management is minimal. The tax treatment is also simpler: one annual tax return.

Short-Term Rental: Higher Yield, Higher Risk

With short-term letting through platforms such as Booking or Airbnb, an apartment in central Sofia can generate higher gross income with good occupancy. But the costs of management, cleaning, utilities and more frequent wear and tear are materially higher. The new European framework for short-term accommodation (Regulation (EU) 2024/1028) raises the requirements for registration and data exchange, adding an administrative element to this model.

For the contractual side of letting - contract, deposit, taxes and management - see the article on renting out an apartment in central Sofia in 2026.

Investment in Central Sofia vs Peripheral Districts

Why Lower Gross Yield Does Not Mean a Worse Investment

In a peripheral district, an apartment costing BGN 200,000 and renting for BGN 700/month gives 4.2% gross yield. In the centre, an apartment costing BGN 450,000 and renting for BGN 2,000/month gives the same 4.2% gross yield. The difference lies in risk: the peripheral property is more vulnerable in an economic slowdown (higher vacancy, weaker demand), while central addresses preserve both demand and value much better.

Price Growth in Central Sofia

Apartment prices in central Sofia have shown steady growth. According to Numbeo and property portals, the average asking price in central Sofia at the end of 2025 is around EUR 3,500/sq m, with actual transactions ranging roughly from EUR 2,700 to EUR 4,100/sq m. Potential capital gain complements rental yield and should be included in the overall investment assessment.

To assess the potential of a specific apartment, see the available properties at Pirotska Residence directly from the developer.

Frequently Asked Questions

What is the realistic rental yield in central Sofia?

Net yield on a long-term rental in central Sofia is roughly 3% to 4.5% per year after taxes and costs. Gross yield is around 4% to 6%. The difference comes from income tax (9% of rent), maintenance costs and vacancy periods.

How is tax on rental income from an apartment calculated?

Individuals pay 10% tax on 90% of the rent received (10% statutory deductible expenses). The effective burden is 9% of gross rent. You declare it annually to the National Revenue Agency by 30 April. If you are a legal entity, the tax treatment is different.

Is long-term or short-term rental better in central Sofia?

It depends on your goal. Long-term rental gives predictability and lower operating costs. Short-term rental can generate higher gross income with active management, but it requires significant spending on cleaning, furnishing and compliance under the European regulatory framework.

Does it matter whether the apartment is new construction?

Yes. New construction with a higher energy class and a modern layout commands higher rent and attracts more demanding tenants with more stable income. Repair costs are also lower in the first years. The developer’s warranty liability further reduces risk.

Does a parking space add real value in a rental scenario?

Yes. An apartment with a parking space in central Sofia commands around EUR 100 to 150 more rent per month. That is EUR 1,200 to 1,800 in additional annual income. In the city centre, parking is scarce and higher-income tenants almost always look for it.

Do I need to declare rental income to the National Revenue Agency?

The landlord is required to declare rental income in the annual tax return under Article 50 of the Personal Income Tax Act. If you are VAT-registered (landlords with taxable turnover above BGN 100,000), the obligations are different. For long-term residential letting by an individual for housing purposes, VAT is not charged.

How can I calculate gross yield quickly?

The formula is: (Monthly rent x 12 / Purchase price) x 100. With rent of BGN 2,000 and a price of BGN 450,000: (24,000 / 450,000) x 100 = 5.3%. For net yield, subtract roughly 1 to 1.5 percentage points for taxes and costs.