Hungarian Real Estate Tax Information
If you want to understand more about the real estate tax structure in Hungary in order to make a wiser choice in your property investment in Budapest, we help you better understand what are the types of taxes and the percentages that you will be required to pay by the local authorities.
Here we give you the information about taxes related to buying or selling property in Budapest
| Buy or Sell a property in Hungary
Hungary is one of the countries that offers a favorable property tax structure in Europe.
Whoever buys or sells property, regardless of whether he is local or foreign, is obligated to pay the same property tax, the difference is in the case of purchase or sale.
Buying a property
What is the tax on the purchase of a property in Hungary?
The tax must be calculated from the market value of the property. The market value of the property is established by the NAV. (The market value is the value for which the property can usually be sold, so in many cases it is the same as the purchase price agreed upon by the parties and stated in the sales contract.) The tax is 4% of this amount.
Sales between direct relatives and spouses are tax-free.
Buying a property
Only half of the property became mine, so will the tax be only half?
If a certain amount of ownership of a property is acquired, a similar proportion of the real estate's market value must also be taken into account when calculating the tax.
Is there a discount so that if I buy an apartment after selling an apartment, it will be included, and thus the tax will be lower?
Yes, this is one of the most frequently used discounts during tax payment, the so-called trade-in discount. If you buy an apartment and sell another apartment within the previous three years or the following year, you must pay tax on the difference between the market value of the purchased and the sold apartment. Thus, if you buy a higher value apartment after selling it, you only have to pay a 4% tax on the difference. On the other hand, if you buy an apartment with a lower value than the property you sold, you do not have to pay tax at all. To apply the discount, the sale of the other apartment must be certified with a copy of the sales contract or in another appropriate way.
Do I have to notify the NAV that I have purchased a property?
The purchase of a property as well as the property rights related to the property must be notified to the Land Registry Office for invoicing by submitting the contract. On the 'B400' data sheet , which must be submitted at the same time as this notification, the client can indicate his/her details and the tax exemption and discount.
How long does it take to pay the tax?
The Ministry of Land sends its decision to the NAV up to 90 days after the conclusion of the sales contract (sometimes it can take up to 180 days). The documents required for the levy must be attached to the decision. The NAV makes a decision (payment order) on the payment obligation. The tax must be paid to the taxpayer no later than the 30th day from the date of delivery of the decision .
How much should I pay in personal income tax after selling the property?
If you have taxable income from the sale of the property, you must pay 15% of it in taxes.
When should I not pay personal income tax after selling the property?
If you acquired the property sold at least 5 years ago , or your expenses match your income, or the transaction is tax-exempt, you do not have to pay taxes on the sale and you do not have to include the income in your tax return. For example, the amount paid for property redeemed by the spouse at the time of divorce is tax-exempt; value received in exchange for the property during a maintenance, inheritance or life annuity contract entered into with a private person.
What date should I consider as the date of acquisition of the property?
Basically, the date on which a valid contract or deed for the acquisition of the property was submitted to the Land Registry. However, in the case of inheritance, the date of the testator's death must be taken into account as the acquisition date. In the case of real estate acquired through a lease agreement, the date of the contract is the date of acquisition.
If it has not been 5 years since the acquisition of the property sold, how should the personal income tax be calculated?
To calculate the personal income tax, the actual income from the sale must be determined. To do this, the expenses eligible for subsidies must be deducted from the income, but the sum of the expenses cannot be greater than the income. The amount thus obtained is the calculated amount, which decreases depending on the time elapsed between the acquisition and the sale. If the sale took place in the fifth year after the acquisition or later, then no taxable income is generated.
Income = expense and income reduction item.
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Income is usually: sales price, value of the property received in exchange, interest paid by the buyer.
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Determining expenses eligible for subsidies. Expenses issued in the name of an individual or other owner, certified by invoice or other document, may be considered as expenses, up to the amount of income, but only if they have not been previously recorded as expenses.
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The reduction item depends on the period of ownership of the property. For each property, the income is the calculated amount (=income-expenses)
100% in the year of acquisition and the following year;
90% in the second year following the year of acquisition;
60% in the third year following the year of acquisition;
30% in the fourth year following the year of acquisition;
0% in the fifth year and following the year of acquisition
Eligible expenses:
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The amount previously spent on the acquisition of the property
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Expenses related to the acquisition of the property, for example: taxes, legal fees.
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The cost of investment that adds value.
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Expenses related to the sale of the property, for example: advertising fees, attorney fees.
An example of calculating the 15% income tax on the sale of property, based on a property acquired in 2022:
Do I have to pay VAT after selling a property?
Individuals do not generate taxable income if they purchased the property in 2022 or earlier and sell it in 2027, regardless of whether it is an apartment, a holiday home, a business, a building site, a plot of land for cultivation, etc.
Non-self-employed persons are not subject to general sales tax, so they do not have to pay VAT when selling an apartment.
Year after acquisition
Amount of income to be calculated
2022
2023
2024
2025
2026
100% of it
90% of it
60% of it
30% of it
0% of it
* The source of information on this page is from the official NAV website https://nav.gov.hu/ado/ingatlan-adasvetel