BUYING A PROPERTY
We must distinguish newly built -first sale- residential properties from those, that are sold for the second time -second hand- apartments, as for the ones sold for the first time, there are somewhat different rules apply.
We first must mention the VAT -Value Added Tax- issue. This mainly concerns the seller of the property, but in certain cases it can have effect on the buyer as well.
In case you are buying a newly built -first sale- residential property, the seller is obliged to apply the VAT -currently 27 %- in it’s invoice. The net purchase price plus the VAT gives you the final amount, that you need to pay in order to acquire the apartment.
Altough, there are some additional costs to maintain a company in Hungary -headquarter maintenance, accountancy fee, etc.- many of our clients chose the option to establish a company in Hungary and once paying the full brutto price of the residential property, reclaim the VAT content of the purchase price. This is a quite complex procedure, in which we are constantly giving legal and financial advises to our clients. If somebody chooses this option, from the date of the purchase and on he has to apply the current VAT in his rental invoices. -In case the client decides to buy as an individual, there is no VAT to be applied in the rental invoices.-
In case you are buying a second hand residential property, there is no VAT applied.
Either you buy a newly built -first sale- or a second hand apartment, there is a stamp duty to be charged after the purchase, that is always to be paid by the buyer. The stamp duty charge equals to the 4 % of the brutto purchase price of the property.
In order to encourage new projects, the government has implemented some exceptions for newly built projects from the stamp duty charge.
A, If the brutto purchase price of a newly built residential property is not higher, than 15 million HUF, there is no stamp duty to be charged to the buyer, the transaction is entirely free of any stamp duty charge.
B, If the brutto purchase price of a newly built residential property is higher, than 15 million HUF, but it does not exceed 30 million HUF, the buyer only has to pay the 4 % of stamp duty charge for the amount above 15 million HUF. So for example if you buy a newly built property for a brutto price of 20 million HUF, you will have to pay stamp duty for 5 million HUF only, which is altogether 200000 HUF. – Otherwise it would be the 4 % of the 20 million HUF, which is 800000 HUF.
