For buyers: types of real estate taxes in Hungary
Transfer tax. Buyers of resale real estate pay transfer of ownership tax. It is charged at a 4% rate if the transaction is under €2.6 million, or 1 billion HUF. If a house or apartment is more expensive, the buyer pays an additional tax of 2% of the amount exceeding this value.
The maximum possible transfer tax is around €520,000.
The tax amount is determined within 60 days after the transaction is concluded. The tax authority calculates and mails the receipt to the buyer. If a foreigner made the transaction without a registered address in Hungary, the notification is mailed to the foreign address.
The tax must be paid within 15 days of receiving the notification. The buyer can pay the tax in full or in instalments. To get a 12-month instalment plan, buyers need to apply to the Tax Administration. They must prove that paying the entire tax at once would put them in an unreasonably difficult financial situation.
Value Added Tax. Buyers of new buildings in Hungary pay a 27% VAT, usually included in the property price.
The reduced 5% VAT rate will be valid until December 31st, 2024. It applies to the first 150 m² of living space of an apartment complex and the first 300 m² of a detached house. The rest of the area is taxed at the standard rate of 27%.
Administrative fees that the buyer pays in addition to taxes:
- €17 — registration of the property;
- €130 — property acquisition permit if the buyer is a foreigner.
The buyer also pays their lawyer, real estate agent, and notary. Typically, these fees amount to approximately 5% of the value of the property.
A foreigner can get a Hungary residence permit by buying residential real estate for at least €500,000. A residence permit by purchasing real estate is issued for 10 years with the possibility of one extension for 10 more years.
Residential properties for getting a Hungary Golden Visa
How to buy a property in Hungary
A foreigner needs to hire a lawyer to buy a property in Hungary. Only local lawyers have the right to enter into a purchase agreement and obtain crucial documents such as a property acquisition permit or an ownership certificate. Lawyers act under a power of attorney on the buyer’s behalf.
Investors can select real estate in Hungary remotely or in person.
Real estate experts at Immigrant Invest select a property according to the buyer’s wishes, organise an online viewing, and verify the seller’s reliability and the transaction’s legality.
Lawyers draw up a preliminary purchase and sale agreement when selecting a suitable property. This document specifies the technical characteristics of the property and the terms of payment.
At this stage, the buyer makes an advance payment — of 10% of the transaction value.
If either party backs out of the transaction after entering into a preliminary agreement, there will be penalties:
- If the buyer backs out, they lose the advance payment and pay a fine equal to the base rate of the Hungarian National Bank on the first day of the first half of the calendar year.
- If the seller is the one to back out, they must double the advanced payment and refund the buyer.
The lawyer obtains an acquisition permit for real estate from the Land Registry after concluding a preliminary agreement.
The buyer transfers the remaining funds to the seller.
The property purchase and sale process is completed when the lawyer receives the property owner’s certificate and hands it to the buyer. This document is the basis for obtaining a residence permit in Hungary.
For owners: types of real estate taxes and utility expenses in Hungary
Property tax does not exist in Hungary. The exception is the areas near the resorts on Lake Hévíz and Lake Balaton: here, owners pay annual property tax since local municipalities set their own tax rate. The annual tax in the Lake Balaton area is €2—3 per 1 m².
Utilities are paid monthly. The payment amount depends on the size and type of the property. An 85 m² apartment costs the owner approximately €135 per month to maintain.
The rental income tax is 15% of the amount earned. It is declared together with the rest of the individual's income.
Property insurance in Hungary is voluntary. Only buyers who apply for a mortgage are required to take out insurance. For example, an insurance policy for a 190 m² Budapest apartment will be €180—300 a year.
For sellers: capital gains tax in Hungary
Property sellers pay the capital gains tax in Hungary. The rate is 15% of the income received. The tax base is determined by calculating purchase and maintenance expenses and the length of ownership.
To calculate income from the sale of real estate, subtract the following from the transaction value:
- the property cost;
- expenses that have increased the value of the property, such as repairs;
- expenses related to registration of transfer of ownership rights, i.e. services of notaries and lawyers.
The percentage of taxable income depends on the period of ownership of the property:
- if the property is sold in the first year of ownership, 100% of the income is taken into account;
- the second year — 90%.
- the third year — 60%.
- the fourth year — 30%.
- the fifth year and thereon — 0%.
A 15% tax is charged on the calculated amount.
Suppose a property purchased for €1,100,000 in 2021 and sold for €1,200,000 in 2024. Notary and lawyer expenses to subtract are €20,000, and repair expenses to subtract are €10,000.
The income from selling this property is €70,000, but only 90% of this amount is taxable since the property was sold in the second year of ownership. When calculating, 90% of €70,000 is €63,000. This amount is subject to a 15% tax, meaning the seller pays €9,450.
To calculate the approximate amount of tax on the sale of real estate, you can use the calculator on the official Hungary National Tax and Customs Administration website.
Other types of real estate taxes in Hungary
The inheritance tax is generally 18%. However, a preferential rate of 9% applies to residential properties.
Exemptions are applied: for example, lineal relatives of the deceased are tax-exempt. This means that children, siblings, and spouses can inherit property without being subject to tax.
Gift tax in Hungary is generally 18% as well, with a preferential rate of 9% for residential properties. Linear relatives are also exempt from this tax.
Main things to remember about Hungary’s real estate taxation
- The tax on the purchase of resale real estate is 4% if the transaction amount is less than 2.6 million euros. Buyers of real estate in new buildings pay VAT at a rate of 5 or 27% — the tax is usually included in the price.
- The property buyer can get a residence permit if the deal exceeds €500,000. The permit is issued for 10 years with the possibility of renewal.
- The cost of maintaining real estate in Hungary consists of utility and insurance payments. Hungary has no annual property tax in all areas except for resort areas.
- The tax rate on sales income in Hungary is fixed at 15%. However, the total amount to be paid depends on the cost of buying and maintaining housing and the duration of ownership of the property.
- When renting out real estate, the owner pays 15% of the income received.
Frequently Asked Questions
Yes. In Hungary, property taxes involve taxes for buyers, sellers, and owners renting out properties.
There’s an annual property tax in resort areas, but it’s abolished elsewhere.
Buyers pay a transfer tax, with rates depending on the property’s value, and new constructions are subject to VAT, potentially at reduced rates until the end of 2024.
Sellers pay a capital gains tax, and rental income is taxed at 15%.
The inheritance and gift taxes are generally 15% each, but lineal relatives are exempt from these.
In Hungary, the tax on property purchases involves a transfer tax, generally between 2% and 4% of the property’s value. This rate can vary based on specific conditions and the property’s value.
Additionally, new properties are subject to a 27% VAT, usually included in the property price. The reduced 5% VAT rate will be valid until December 31st, 2024.
No, there is no annual property tax in most parts of Hungary. The exception is the areas near Lake Hévíz and Lake Balaton resorts, where owners pay annual property tax since local municipalities set their own tax rate.
The rental tax in Hungary is 15%. It is declared together with the rest of the income received during the tax year. You can submit your tax return online.
Yes, foreigners in Hungary are subject to the same property taxes as Hungarian citizens, including transfer taxes on purchases, potential annual property taxes in resort areas, and rental income.
If a foreigner is a linear relative of a Hungarian citizen, inherits local property or receives it as a gift from that citizen, they are not taxed.
Yes, it is 15% and paid by the seller. The tax base is calculated using purchase and maintenance expenses, including repairs. The calculation also takes into account the length of ownership. The seller is not taxed if a property is sold five years after the purchase.
The seller pays a 15% tax on sales and real estate income in Hungary. The tax base depends on the years the seller owned the residential or commercial property.
The calculation also takes into account the costs of purchase and sell costs, as well as maintenance investments, such as repairs. These amounts are deducted from the tax base.
Hungary does not levy an estate tax on inherited properties. Instead, inheritance is subject to a declaration process, potentially involving administrative fees.
The Hungary residence permit can be obtained by buying a residential property worth at least €500,000.
Investing in Hungarian real estate allows foreigners to get a residence permit, travel without a visa to the European Union countries, and increase their assets. According to Eurostat, property prices in Hungary have more than doubled since 2010.
To buy a property, a foreigner needs to hire a lawyer. Real estate transactions are not conducted without legal support in Hungary. The lawyer will prepare a preliminary contract of sale and get an acquisition permit as well as a certificate of ownership.
Property taxes include:
- transfer tax paid by buyers — up to 4%;
- VAT is paid by the buyer of new building properties — 27% VAT, with the reduced 5% rate in place until December 31st, 2024;
- capital gain tax is paid by sellers — 15%, with the tax base depending on purchase and maintenance expenses, as well as the length of ownership;
- income tax is paid by landlords — 15% annually.
With other taxes in Hungary, individuals pay a flat personal income tax rate of 15%. Employees contribute 18.5% to social security, and employers contribute an additional 13% towards social contributions. The total tax and contribution burden on an average salary is 33.5%, making the net salary approximately 66.5% of the gross salary.
Corporate income tax is set at a rate of 9%.
The VAT general rate is 27%, with reduced rates of 0%, 5%, and 18% for specific goods and services.
Buyers pay the transfer tax of up to 4% of the property’s value. If they buy a new building, they also pay a 27% VAT. The reduced 5% VAT rate will be valid until December 31st, 2024. Additionally, administrative fees and legal costs usually amount to up to 5% of the transactional value.
Sellers in Hungary pay the 15% capital gain tax; the tax base depends on purchase and maintenance expenses, as well as the length of ownership. If the property was owned for over 5 years, the tax rate decreases to 0%.
Rental income in Hungary is taxed at a flat rate of 15% every year.
