Immovable property

Last reviewed 21 Aug 2023

Tax depreciation

Straight-line

Straight-line, using the rates prescribed in Corpo- rate Income Tax Act 1996 No. LXXXI, recognising depreciation under commercial law

Additional

Of rights (also in connection with real estate), where as a result of contractual changes the rights can no longer be successfully asserted

On property, plant and equipment, in the event of physical damage as a result of “force majeure”

Depreciation categories

Land

No depreciation

Buildings

Durable construction

2 % (concrete, reinforced concrete, brick, etc.)

Medium-life construction

3 % (light steel and other metals, etc.)

Lightweight construction

6 % (planks, etc.)

Rental property

5%

Tax base for buildings

Acquisition and construction costs as defined in accounting law

Special depreciation

None

Write-ups

None

Real estate income tax

Object of taxation

Capital gains from the sale of real estate property or the reation, sale and termination of rights in immovables by individuals

Tax rate

15%

Tax collection

declared and paid with the individual's annual personal income tax return

Exemptions

The income from the sale of real estate property or rights in immovables is determined after the deduction of costs in the following percentages:
- 100 per cent of the calculated amount in the year of acquisition and in the following year,
- 90 per cent of the calculated amount in the second year following the year of acquisition,
- 60 per cent of the calculated amount in the third year following the year of acquisition,
- 30 per cent of the calculated amount in the fourth year following the year of acquisition,
- 0 per cent of the calculated amount in the fifth year following the year of acquisition and in subsequent years.

Property transfer tax

Object of taxation

Acquisition of Hungarian real estate for consideration (transactions between associated parties may be
tax exempt)
under certain circumstances acquisition of invest- ments in a company owning real estate located
in Hungary (transactions between associated parties may be tax exempt)
under certain circumstances in connection with reorganisations of a company owning real estate located in Hungary (exception: under certain circumstances tax advantaged reorganisation)

Sale of Hungarian real estate reclassified from outer area into inner area within the 10 year period before sale might be subject to real estate transfer tax

 

Basis of assessment

Market value in case acquisition

Value increase in case of sale of reclassified real estate

Tax rate

Acquisition: for commercial buildings 4 % up to a fair value of HUF 1 billion (EUR 2.85 million), 2 % for exceeding amounts, maximum tax is HUF 200 million
(EUR 500,000)
reductions for residential property

Sale of reclassified real estate: 90% for the difference between market value as of sale and as of acqusition

 

Property-related taxes

Property tax

(land tax, buildings tax)

Objects of taxation

Basis of assessment : Local government authorities decide between:
1. Area in m2
2. Market value

Amount of tax: Either an amount per m2 or a percentage tax rate, as determined by local government authorities; the statutory maximum amount or maximum tax may not be exceeded

Ceiling:
Land:
HUF 200 / m2 + Hungarian Official Consumer Price Index from 2003 or 3.0 % of the adjusted market value
Buildings:
HUF 1,100 / m2 + Hungarian Official Consumer Price Index from 2003 or 3.6 % of the adjusted market value

Real estate funds

Owner of the fund assets

The fund company, so that for the investor there is no entry in the Property Register and no property transfer tax.

Annual valuation

3/6-monthly valuation by expert.

Borrowing

Maximum permissible 60 %.

Diversification of risk

Value of any individual property not to exceed 20/30 % of total fund assets.

15 % of the fund assets: cash, securities.

Tax liability

15 % if fund shares are owned by a private investor 9 % if the investor is subject to corporate income tax.