BUYING PROPERTY IN HUNGARY

The FAQs about property in Hungary

How can a foreigner buy in Budapest?

Every foreign investor can buy properties in Budapest either as a Hungarian company or as a private individual.

In order to buy as an individual the buyer has to file a request for permission to the municipality of Budapest, the request will then be answered within 60 days.

The request will be approved if you buy only one apartment. In the event that you wish to buy more then one apartment you can either:

• Register the second apartment under the name of a family member
• Establish a Hungarian BT company that can buy and sell with no restrictions

What is the difference between buying as a private and a company?

Setting up costs:

• Company: Approx. 800-850 Euro including lawyer fees, notary, stamp duty and bank charges
• Private: Approx. 350-400 EUR lawyer fees for the process of getting the permission

Purchase tax / stamp duty

• Company: 2% if sold within 2 years
• Private: 6% if held for longer than 2 years

Permission

• Company: No permission required
• Private: The approval of the Administrative Office of Budapest is required. The obtaining of this approval can take up to 3 months. The sellers usually don’t want to wait 3 months, and require the full purchase price to be paid before the whole procedure is over.

Restriction on number of properties one can purchase

• Company: None
• Private: Permission will not be granted for more than one apartment per individual.

Duration of the process

• Company: Immediately (1-2 days)
• Private: Minimum of 3 months.

On-going costs

• Company: 350 EUR - 400 EUR / year accounting
• Private: None

Tax

• Company: 16% corporate tax on profits. No dividend tax. The company can reclaim back all expenses related to the apartment including trips to hungary of the company owners and interest for owners loan. Those expenses will be deduced from the company profits. Should the company be sold, there is no capital gains tax for the seller, and there is no stamp duty for the purchaser either.
• Private: 20% capital gains tax on profits, there is no possibility to deduce expenses. There is a double taxation agreement between Hungary and EU countries.

How do I set up a company?

Some of the buyers choose to establish a deposit company (B.T.) in order to purchase the property. The steps of opening the company:

• choose a partner – the company should have a general partner and a limited partner
• get passport copies, mother name of both partners
• the lawyer will prepare the article of association for the company which you will sign
• the lawyer will get the company registration number from the court of registration
• you will go to the bank to open a bank account, deposit 30,000 HUF (120 €) as capital for the Company
• the company will be fully registered within 4-6 weeks; you may buy and sell properties during this period

Keep in mind that Court of Registry is open daily 08:30 – 13:00 and is not open on Friday - Sunday. The whole process of registering the company should take no more then a day, taking in consideration that all documents and information will be ready. Our sales personnel will be happy to assist you during this process.

What are the costs involved?

Lawyer fees

1% of the property cost

Agency fees

3% of the property cost

Stamp Duty

• When buying a resale apartment 2 % of the price up to 4,000,000 HUF and 6% from the part of the price higher then 4,000,000 HUF
• When buying in a new development apartment with price of up to 15,000,000 HUF (60,000 €) there is no stamp duty.
• If the apartment costs between 15,000,000 HUF and 30,000,000 HUF you will pay 6% stamp duty on the difference
• If the apartment costs more then 30,000,000 HUF you will pay 6% stamp duty on the whole amount.
• A company that intends to sell the property within two years time will pay only 2% stamp duty.

Establishing a company

Approx 800 €, including - lawyer fees, notary and stamp duty for the company

Is the property free hold or lease?

All the properties in Budapest are free hold; the owners of the property are registered on the title.

Do I have to come to Budapest in order to buy?

When buying as a private you don’t need to come to Budapest, one may sign a power of attorney in the Hungarian embassy and send it to Budapest; your sales agent can sign the contract on your behalf.

When registering a company the general partner has to come to Budapest in order to sign in the bank, once the company is registered the contract can be signed with a power of attorney.

How much tax do I have to pay?

Private person will pay capital gain tax of 20% of the profit from the rent and the sale, this tax can be deduced from your tax liability according to the double taxation agreement between Hungary and other EU countries.

How do I get possession of the property?

When buying a re sale apartment you will have to pay a certain deposit upon signing the purchase contract – usually 10% of the total price, on that occasion your name is registered on the title sheet as a remark of intention to buy. Once paying the full amount of the purchase price your name will be registered on the title as the exclusive owner of the property.

When buying in a new development the registration will take place after the completion of the project.

Can I get finance from a Hungarian bank?

At present you have the possibility to obtain mortgage from a Hungarian bank under the following conditions:

• the amount of the loan is up to 70% of the price of the property
• the loan will be granted for a period of 1-20 years
• interest rate eurolibor + 2.5% per annum
• monthly payments will include capital and interest
• the buyer must be a private individual and get permission for buying in Budapest
• for more details please contact your sales agent in Casaro

How to furnish and renovate?

Renovation: When renovating an old apartment one must take into consideration the following works that have to be done:

• replacing the electric system and main board
• replacing hot / cold water piping
• replacing the heating system to an independent heating system that supplies hot water to the radiators as well as kitchen and bathroom
• fixing the carpentry items while taking care to keep their authentic design

Hungarian Property

» Hungary

» Property Investment in Hungary

» The Hungarian Economy

» About Hungary

» Buying Property in Hungary FAQS

» Investment Properties in Hungary