Foreign citizens may buy real estate properties in Hungary quite easily if the necessary permits are obtained with the local municipality. Foreign companies will encounter no difficulties either when buying real estate property in Hungary. According to the Hungarian Civil Code a private contract or purchase agreement must be signed between parties when real estate purchases occur. The law also states a Hungarian lawyer must countersign the agreement. Foreign citizens must also know that it may take between two and three months to obtain the permit with the local administrative office.
Foreign entities will usually be advised to register a company in Hungary in order to not apply for any permits when buying a property and thus reducing the purchase period from months to days.
So, you are recommended to get in touch with experienced lawyers at our law firm in Hungary. They can help you understand the rules and regulations regarding purchasing a property in Hungary.
What are the main steps when buying a property in Hungary?
The first step when purchasing real estate in Hungary will be to choose the property and perform due diligence in order to make sure no encumbrances are registered. Once an agreement has been reached the Hungarian law firm will start the procedures for obtaining all necessary permits with the local authorities and then the property valuation begins. Once these steps have been completed the lawyer will draft the real estate purchase contract and the buyer must deposit at least 10% of the property sale price. Within 30 days the purchase agreement must be submitted with the Hungarian Land Register and after obtaining the necessary permits from the administrative office the purchase process is completed. The most important phase when closing the agreement is to draft a declaration the whole purchase amount of money has been paid and the possession of property has been transferred.
|Specific legislation applicable (YES/NO)||Hungarian Civil Code|
Possibility to acquire Hungarian properties by foreigners (YES/NO)
|Yes, with the exception of agricultural land|
Types of properties that can be purchased in Hungary
|Real estate due diligence required (YES/NO)||No, however, this preliminary step is recommended by our Hungarian lawyers.|
|Documents to draft for property acquisition||
– preliminary contract,
– identification papers of the buyer and seller,
– sale-purchase agreement.
|Financing options availability (YES/NO)||
Yes, financing is available for those who acquire properties in Hungary.
|Special property acquisition programs for foreign citizens (YES/NO)||
|Timeframe to acquire a property in Hungary (approx.)||
Approx. one month and a half
|Taxes to consider upon a property purchase||
– transfer tax,
– real estate agent fees (if applicable),
– legal fee,
– registration tax.
|Land Registry registration requirement (YES/NO)||Yes, the property must be registered with the Land Registry|
|Best cities to buy properties in Hungary||
|Residency requirements for foreign citizens buying real estate||
Yes, for non-EU citizens who must also obtain a special license to buy a property.
|Possibility to appoint a Hungarian representative during the transaction (YES/NO)||
Yes, legal representation is advised.
|Property tax rates in Hungary||
4% of the market value of the property
|Support in buying a property in Hungary (YES/NO)||Yes, you can count on our law firm in Hungary for support in acquiring real estate.|
Registration of real estate in Hungary
If you purchase a property in Hungary, it must be registered in the centrally organized Land Registry system. The concerned registry keeps the data regarding the area, classification of use, information of owners, and the encumbrances. This information is accessible by the public to maintain public credibility by showing the authenticity of the data. Furthermore, it also protects the rights of a good faith buyer. Due to the availability of the Land Registry publicly, it is not possible to keep the identity of the real estate owner hidden. So, the owner’s name, address, and company’s registration number (in case of any), all is visible from the Land Registry.
You can trust the legal support of our lawyers if you do not want to disclose your identity. They can describe to you if this possibility exists in this matter. In addition to this legal service, you can also trust the assistance of our lawyers if you want to open a branch vs. a subsidiary in Hungary. They will provide you with legal backing in this regard by providing you with a thorough guide to the company structures in this country.
Are any real estate taxes in Hungary?
The buyer must pay a 4% tax of the total purchase price of the property within two to six months after the Hungarian property has been registered. Foreign citizens outside the European Union will also be required to pay for the purchase permit and the fee for this permit is about 170 euros. Owners of Hungarian real estate property must also know that yearly maintenance costs are necessary. These costs will usually include a council tax, a water supply tax and a village tax.
How are real estate taxes levied in Hungary?
As the real estate is subject to the land and building, the tax is levied by the respective municipality based on the location of property. These taxes are imposed based on market value or the floor space of the property. The concerned authorities can raise the taxes if you carry out any business activity on your real estate; for instance, they may impose corporate income tax due to your business activities.
If you purchase a property in Hungary, it is necessary to run a due diligence before buying that property. You can obtain legal services from our attorneys in Hungary to run a real estate due diligence. This step can help you evaluate if the property bears any risks.
Who is exempted from property tax in Hungary?
Although property tax is applicable in Hungary, there are some exceptions also. Please find below the list of the individuals exempted from property tax:
- Transfer of property among spouses, including divorce settlement, is not taxable;
- Transfer of property to direct ascendants, descendants, adopted children, adoptive parents, step-children, step-parents, foster parents, and siblings is also exempted from property tax;
- If any local purchases a real estate in Hungary with the help of the Family Housing Support Program (CSOK);
- If you construct on an originally vacant lot within four years of buying it;
- If you purchase a property in Hungary from the municipality or state.
If you need more information about the exemptions from the property tax in Hungary, you can rely on the legal knowledge of our seasoned lawyers. They will provide you with all the necessary details in this regard. Here is also our video on property purchase:
You can also get legal help from our lawyers if you open a bank account in Hungary. Besides a personal account, they can also help you obtain a corporate bank account in this country.
Reduced property tax in Hungary
You can purchase a property in Hungary with reduced property tax when you buy a piece of real estate within three years of selling another one; the tax implications will only apply to the difference in value or only if the purchase price is higher. Please find below some other circumstances where you can buy property in Hungary and pay less tax on it:
- If you are under the age of 35, and you buy a home in Hungary, you only need to pay 2% tax if that property is for less than EUR 40,900;
- If you buy a newly built home, you only need to pay the property tax to the part above EUR 40,900.
You can contact our skilled lawyers if you want to purchase a real estate in Hungary. They will provide you with a comprehensive guidance regarding taxation and other necessary obligations regarding buying a property in Hungary.
If you want to protect your products from counterfeiting in Hungary, it is necessary to have a trademark registration. You can get the assistance of our lawyers in this regard.