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 Q. How can a foreigner buy
in Hungary?
A. Every foreign investor can buy properties in Budapest either
as a Hungarian company or as a private individual.
In order to buy as an individual the buyer has to file a request for
permission to the municipality of Budapest, the request will then be
answered within 60 days. The request will be approved if you buy only
one apartment.
In the event that you wish to buy more then one apartment you can either:
- register the second apartment under the name of
a family member
- establish a Hungarian BT company that can buy
and sell with no restrictions
Q. What is the difference
between buying as a private and a company?
A. Setting up costs
Company: Approx. 800 Euro including lawyer fees, notary, stamp duty and
bank charges
Private: Approx. 350-400 EUR lawyer fees for the process of getting the
permission
Purchase tax / stamp duty
Company: 2% if sold within 2 years
Private: 6% if held for longer than 2 years
Permission
Company: No permission required
Private: The approval of the Administrative Office of Budapest is
required. The obtaining of this approval can take up to 3 months. The
sellers usually don’t want to wait 3 months, and require the full
purchase price to be paid before the whole procedure is over.
Restriction on number of properties one can purchase
Company: None
Private: Permission will not be granted for more than one apartment per
individual.
Duration of the process
Company: Immediately (1-2 days)
Private: Minimum of 3 months.
On-going costs
Company: 350 EUR - 400 EUR / year accounting
Private: None
Tax
Company: 16% corporate tax on profits. No dividend tax
The company can reclaim back all expenses related to the apartment
including trips to hungary of the company owners and interest for owners
loan. Those expenses will be deduced from the company profits.Should the
company be sold, there is no capital gains tax for the seller, and there
is no stamp duty for the purchaser either.
Private: 20% capital gains tax on profits, there is no possibility to
deduce expenses.
There is a double taxation agreement between hungary and EU countries.
Q. How do I set up a
company?
A. Some of the buyers choose to establish a deposit company (B.T.)
in order to purchase the property.
The steps of opening the company:
- choose a partner – the company should have a
general partner and a limited partner
- get passport copies, mother name of both
partners
- the lawyer will prepare the article of
association for the company which you will sign
- the lawyer will get the company registration
number from the court of registration
- you will go to the bank to open a bank account,
deposit 30,000 HUF (120 €) as capital for the Company
- the company will be fully registered within 4-6
weeks; you may buy and sell properties during this period
Keep in mind that Court of Registry is open daily
08:30 – 13:00 and is not open on Friday - Sunday.
The whole process of registering the company should take no more then a
day, taking in consideration that all documents and information will be
ready. Our sales personnel will be happy to assist you during this
process.
Q. What are the costs
involved?
A:
- lawyer fees: 1% of the property cost
- agency fees: 3% of the property cost
- stamp duty:
When buying a resale apartment 2 % of the price up to 4,000,000 HUF
and 6% from the part of the price higher then 4,000,000 HUF
When buying in a new development apartment with price of up to
15,000,000 HUF (60,000 €) there is no stamp duty,
if the apartment costs between 15,000,000 HUF and 30,000,000 HUF you
will pay 6% stamp duty on the difference
if the apartment costs more then 30,000,000 HUF you will pay 6% stamp
duty on the whole amount.
A company that intends to sell the property within two years time can
pay only 2% stamp duty.
- establishing a company – approx 800 €,
including – lawyer fees, notary and stamp duty for the company
- applying for a permit as a private individual –
50,000 HUF
Q. Is the property free
hold or lease?
A. All the properties in Budapest are free hold; the owners of
the property are registered on the title.
Q. Do I have to come to
Budapest in order to buy?
A. When buying as a private you don’t need to come to Budapest,
one may sign a power of attorney in the Hungarian embassy and send it to
Budapest; your sales agent can sign the contract on your behalf.
When registering a company the general partner has to come to Budapest
in order to sign in the bank, once the company is registered the
contract can be signed with a power of attorney.
Q. How much tax do I have
to pay?
A. Private person will pay capital gain tax of 20% of the
profit from the rent and the sale, this tax can be deduced from your tax
liability according to the double taxation agreement between Hungary and
other EU countries.
Q. How do I get
possession of the property?
A. When buying a re sale apartment you will have to pay a
certain deposit upon signing the purchase contract – usually 10% of the
total price, on that occasion your name is registered on the title sheet
as a remark of intention to buy.
Once paying the full amount of the purchase price your name will be
registered on the title as the exclusive owner of the property.
When buying in a new development the registration will take place after
the completion of the project.
Q. Can I get finance from
a Hungarian bank?
A. At present you have the possibility to obtain mortgage from
a Hungarian bank under the following conditions:
- the amount of the loan is up to 70% of the
price of the property
- the loan will be granted for a period of 1-20
years
- interest rate eurolibor + 2.5% per annum
- monthly payments will include capital and
interest
- the buyer must be a private individual and get
permission for buying in Budapest
- for more details please contact your sales
agent in Casaro
Q. What is the best way
to rent out my apartment?
A. The Casaro property management department will be
responsible to rent out your apartment.
In order to get the maximal rental income the property must be renovated
and fully furnished and equipped.
Log into our partners rental web site for more details
www.budapestrent.com
Q. How do I secure my
money when buying a property in Budapest?
A. When buying an old apartment:
- first payment is usually 10% of the cost of the
apartment; the payment is given to the lawyer which after transferring
it to the seller will register a remark in the land registry office on
your behalf
- the last payment should be transferred to the
lawyers escrow account, the lawyer will pay the money to the seller
upon fulfillment of the following conditions:
- the seller will prove that all debts on the
apartment have been paid, and will bring a “0” statement from all
the utility companies
- the seller will sign a declaration approving
that he has received the full amount of the money and that he has no
objection to the registration of the property in the land registry
office on the name of the buyer
- the lawyer will then register your name as
the new owner of the property.
When buying a new apartment:
When buying a new apartment the following is recommended:
- to buy only from a developer who is using bank
finance for the construction
- to pay staged payment according to the progress
of the construction work
When the developer is using bank finance the
payments of the buyer are deposited to a closed bank account to which
the developer have no access. He can only withdraw money from the
account upon completion of the building and handing over possession on
the apartments to the buyers.
Take into consideration that in Hungary the
developer is not obliged to issue bank guarantee in favor of the buyers.
Vít Klíma
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604 568 553 |
