A guide to fees and taxes on Budapest real estate investments
Buying property in Hungary is a fairly standard process. In such cases, the profit is in the details. Investors can make the most sound financial decision by diving deep beyond Budapest real estate prices, and into the nitty gritty of expected fees and tax rates for different entities.
Can a foreigner buy property in Hungary? Absolutely. But non-EU citizens should account for different fees, and consider what the most profitable pricing construction could be. We’ve created a comprehensive guide of all the fees and taxes related to a Budapest real estate purchase, sale and rental management.
These are the fees and taxes associated with any Budapest real estate investments made by EU and non-EU citizens.
When the purchase of a Budapest property is complete, the buyer also pays a stamp duty, legal fees for lawyer services, and any potential notary fees.
Currently, the fees are made up of the following percentage of the total purchase amount:
The buyer is exempt from paying the real estate agent’s commission, as in most cases in Hungary this is paid for by the seller.
Once you have signed the preliminary agreement, a lawyer will deliver it to the land registry office, where the intention to sell is recorded. Once permission is obtained for the property sale by local authorities, you can pay the remaining contractual amount, and the ownership title is delivered to the Land Register (Földhivatal). This carries with it a fee of €19.30.
To give you an idea of costs + fees in action, let’s take an example of a fictional €177,500 property:
Total cost for EU citizens | =€ 186,873.30 | |
Property price | € 177,500 | |
Legal fees | 1% | € 1,775 |
Legal fee VAT | 27% of legal fee | € 479 |
Stamp duty | 4% | € 7,100 |
Land registration | €19.30 |
First and foremost, if you are a non-EU citizen, you will automatically have to pay a €200 purchase permission fee to the National Tax and Customs Administration of Hungary (NTCA) when buying a Budapest property.
You are also required to provide a notarised copy of your passport as proof of identity when you sign the preliminary sales agreement, which costs approximately €6.50.
With the same €177,500 property example, the numbers for a Budapest property sale look like this for a non-EU citizen:
Total cost for non-EU citizens | =€ 187,079.80 | |
Property price | € 177,500 | |
Legal fees | 1% | € 1,775 |
Legal fee VAT | 27% of legal fee | € 479 |
Stamp duty | 4% | € 7,100 |
Land registration | €19.30 | |
Purchase permission | € 200 | |
Passport notary | € 6.50 |
Selling property in Hungary comes with a few seller specific fees. Here is what you need to be aware of before pricing your property for the Budapest real estate market.
The seller is exempt from paying legal fees, as in Hungary this is paid for by the buyer.
Let’s say that you sell the €177,500 real estate property that you purchase in the previous example, 8 years later. The property has appreciated to a value of €249,760. this is how your tax breakdown would be calculated:
Total net sale profit | =€ 53,750 | |
Property price | € 249,760 | |
Agency fees | 4% | € 9,990 |
Agency fee VAT | 27% of legal fee | € 2,697 |
Gross profit | € 72,260 | |
Net profit (with repairs and improvements deducted) | €53,750 |
If you’ve got a Budapest apartment for long-term rent, these are the fees that you need to anticipate.
The difference between deducting individual costs and paying a flat rate is not insignificant in the long run, as we can see in the example below, for a long-term Budapest apartment rental with a projected €800 monthly rental fee.
Monthly net income | =€ 541 | |
Rental income (monthly) | € 800 | |
Management fee | 10% + VAT (27%) | € 101 |
Individual costs | € 226 | |
Income tax | 15% of net annual profit | € 33 |
Monthly net income | =€ 494 | |
Rental income (monthly) | € 800 | |
Management fee | 10% + VAT (27%) | € 101 |
Individual costs | € 226 | |
Income tax | 10% flat rate on gross annual profit | € 80 |
If your company has a Budapest apartment for long-term rent, these are the fees that you need to anticipate.
In the long-run, renting a property in Budapest for the long-term is far more lucrative as a company than as an individual.
Net income per month | =€ 590 | |
Rental income (monthly) | € 771 | |
Management fee | 10% + VAT (27%) | € 97 |
Corporate tax | 9% | € 69 |
Business tax | 2% | € 15 |
If you’ve got a Budapest apartment for short-term rent, these are the fees that you need to anticipate.
If we run the numbers on a Budapest based short-term apartment rental with €1,527 in monthly income, it looks like this:
Net income per year | =€ 8,229 | |
Rental income (annual) | € 18,330 | |
Management fee | 21% | € 4,542 |
Management fee VAT | 27% of fee | € 1,226 |
AirBnB fee | 3% of rental income | € 550 |
AirBnB fee VAT | 28% of AirBnB fee | € 148 |
Accounting | € 540 | |
Accounting fee VAT | 27% of accounting | € 146 |
Insurance | € 110 | |
Banking | € 120 | |
Utilities | € 960 | |
Utilities VAT | 27% of utilities | € 259 |
Income tax | 15% of annual gross income | € 1,500 |
Tourism tax | 4% every guest night | € – |
If you’ve got an investment property in Hungary that you’d like to rent out short-term, these are the fees that you need to anticipate.
Net income per year | =€ 8,435 | |
Rental income (annual) | € 18,330 | |
Management fee | 21% | € 4,542 |
Management fee VAT | 27% of fee | € 1,226 |
AirBnB fee | 3% of rental income | € 550 |
AirBnB fee VAT | 28% of AirBnB fee | € 148 |
Accounting | € 540 | |
Accounting fee VAT | 27% of accounting | € 146 |
Insurance | € 110 | |
Banking | € 120 | |
Utilities | € 960 | |
Utilities VAT | 27% of utilities | € 259 |
Corporate tax | 9% | € 861 |
Local tax | 2% | € 433 |
Tourism tax | 4% every guest night | € – |
Calculating all of the ins and outs of Budapest property investments is time-consuming at best, misleading and faulty at worst. Consulting with a trusted lawyer, accountant and advisory team is highly recommended, as one mistake or missing factor could mean significant sums in missed revenue or additional taxes.
Matthew and Daniels’ ThreeSixty offer was created to guide you through a sound investment from scouting a property to managing rentals. Our local team of experts is committed to securing maximum profitability for your investment.