Buying Property in Hungary: Taxes, Costs, ROI, Property Maintenance, Residence Permit and Citizenship

Buying real estate in Hungary is becoming increasingly attractive to foreign investors due to a stable market, affordable prices and opportunities to obtain a residence permit (RP).

We will tell you about the key aspects related to purchasing real estate in Hungary: taxes, expenses, return on investment (ROI), property maintenance, as well as conditions for obtaining a RP and citizenship.

Taxes and expenses when buying real estate

Property transfer tax. When purchasing real estate in Hungary, the buyer is required to pay a property transfer tax. The tax rate is 4% of the market value of the property, if it does not exceed 1 billion Hungarian forints (approximately 2.6 million euros). For amounts exceeding this threshold, the rate is reduced to 2% on the excess.
Value added tax (VAT). When purchasing new buildings, VAT is 27%. However, until the end of 2024, a reduced rate of 5% applies to certain properties. Usually, the VAT amount is already included in the price of the property.

Administrative fees. Additional costs include:

Obtaining permission to purchase real estate: from 170 to 200 €.
Imposing a ban on real estate transactions during document verification: 60 €.
Extract from the cadastral register: €30.
Issue of title deed: €22.
Legal and service fees. The services of a realtor, notary and lawyer usually amount to up to 5% of the property value.

In total, additional costs when buying a property in Hungary can reach 10% of its value.

Taxes on the sale and rental of real estate

Capital gains tax. When selling real estate, a profit tax is levied at a rate of 15% of the difference between the purchase and sale price. However, the amount of tax is reduced depending on the period of ownership of the property:

Up to 2 years - the entire amount of income is taxed.
From 2 to 3 years - 90% of income.
From 3 to 4 years - 70% of income.
From 4 to 5 years - 50% of income.
More than 5 years - no tax is levied.

Tax on rental income. Owners who rent out real estate are required to pay a tax at a rate of 15% of the income received.

Property Maintenance Costs and ROI

Property owners in Hungary incur the following maintenance costs:

Utility bills. Include electricity, water, heating and other utilities.
Property insurance. It is recommended to take out an insurance policy to protect against possible risks.
Routine repairs and maintenance. Regular maintenance and repairs are necessary to keep the property in good condition.

The amount of these costs depends on the type, size and condition of the property, as well as its location.

The return on investment in real estate in Hungary depends on several factors:

Growth in property values. Since 2010, property prices in Hungary have more than doubled, indicating steady market growth.
Rental income. The rental income tax rate is 15%.

Investors can expect stable rental income and potential growth in the property value in the long term.

Residence permit and citizenship

Buying real estate in Hungary can serve as the basis for obtaining a residence permit. The recommended investment amount is from €155,000. The living area of the property must be at least 6 m² per family member. The residence permit status is issued for up to five years with the possibility of extension.

It is important to note that in order to obtain a residence permit, the property must be suitable for habitation, i.e. completed and meet the established standards. Purchasing a house under construction or an apartment at the foundation pit stage is not suitable for these purposes.

After five years of continuous residence in Hungary on the basis of a residence permit, the investor can apply for permanent residence (PR). And after another three years - for Hungarian citizenship, subject to meeting all the necessary requirements, including knowledge of the Hungarian language and integration into society.

Buying real estate in Hungary not only provides investors with the opportunity to receive a stable income, but also opens the way to obtaining a residence permit and, in the future, citizenship of the country.

Mercury Group specialists take on the entire process of buying real estate in Hungary, starting with the selection of the property and ending with the preparation of a package of necessary documents on a turnkey basis.