Thinking about buying or selling property in Hungary? Or have you already set up housekeeping? Buying a home, rather than renting, is a better long-term investment for you and your family. However, how should one go about doing so? Is a permit necessary? More importantly, how exactly does one pay property tax? See for yourself!
A lawyer is essential when buying property.
Real estate for domestic purposes can be purchased by natural persons in Hungary with little red tape. Nonetheless, once you’ve settled on a property and reached an agreement with the seller, you’ll need to hire a lawyer to draught a purchase agreement and register the resulting paperwork at the land registration. An attorney will oversee the process to ensure that it is carried out in accordance with the law and that all terms and conditions are clearly communicated to all parties.
Traditionally in Hungary, the buyer is responsible for finding and paying the lawyer’s fees, which can be a flat rate or a percentage of the purchase price (often between 0.5 and 3 per cent). Both the seller and the buyer may choose to hire their own lawyers to represent their respective interests in the transaction, or they may agree to split the cost.
Buying a house without authorization
You could require permission from the local authorities to accomplish this, and this depends on your nationality. However, you do not require a licence if you are
a Hungarian national (dual citizens included), a citizen of another EU member state, a resident of Norway, Lichtenstein, Iceland, or Switzerland who has inherited property,
You don’t require a licence either if you are buying real estate for your Hungarian company if that piece of real estate is vital for company operation, e.g. if you are planning to rent it. Foreigners who are interested in obtaining permanent residency for their entire family in Hungary often choose to set up shop in this fashion.
The local government office’s licence
If you don’t fall into one of those categories, you’ll need to get a permit from the appropriate government agency in the area where the property you want to acquire is located. The procedure will involve the government office consulting with
the local municipality to determine if the purchase violates the interests of the municipality or Hungary,
the Immigration Office to confirm you are not barred from Hungary,
the Police to confirm you are not wanted for criminal actions.
The lawyer managing the purchase can apply for the licence on your behalf. If you are a permanent resident of Hungary and have already applied for citizenship, you can pay a reduced application fee of HUF 10,000 (about EUR 25). The whole process will take between 15 and 30 days.
the paperwork required to obtain a licence for real estate purchases
You will require the following paperwork to apply for a licence to buy residential property:
- Application form
- Documentation of the application fee payment
- Authenticated or notarized copies of your identification (such as a passport, license, or Hungarian ID)
- The preliminary purchase agreement for the property in question
- Title Deed for the contested property (not older than 21 days)
- Power of attorney for the transaction’s lead attorney
- Verifying the applicant’s criminal history to ensure there are no charges pending
Hungarian real estate tax
Once you have obtained your property purchase licence and the purchase agreement is concluded, your lawyer will register the acquisition with the land registry. You will receive a notice from the Tax Authority after that is finished, and you will have 30 days to pay the property tax after that. Although incentives are available, the typical property tax rate is 4% of the purchase price.
- Property tax is 2% if the buyer is under 35 and the purchase price is less than HUF 15 million (about EUR 37,500).
- Property taxes are not due if the building was recently constructed and the acquisition price was less than HUF 15 million (about EUR 37,500). Regardless of the purchase price, the portion under HUF 15 million is still tax-free.
- Property tax is 0% if you purchase a vacant lot and construct a home within 4 years. However, a land tax may be levied by the neighbourhood municipality.
Purchase a new house in Hungary
Finding your ideal home is step one in the Hungarian real estate buying process. If that’s the case, legal representation is a must. Your attorney can take care of obtaining the necessary property purchase licences on your behalf if you are not a Hungarian citizen. Once you’ve made the purchase, you’ll be responsible for property tax, which is typically around 4% of the total amount.
If you are an international client considering relocating to Hungary or opening a business here, our partners can help. If buying property in Hungary is the next logical step in your life, we’re here to help with both residential and commercial purchases.
