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Frequently Asked Questions
Everything about buying an apartment in Budapest - FAQ
Buying a Property in Budapest
In what districts should I buy?
Buying property in all districts could be beneficial. But as in every other city, it depends on the circumstances and criteria of the buyers to find the best area for purchasing. If someone is looking for the highest prestige, then they should look for district 5 and its neighbours such as 6, 7, 8, 9 and 13 on the Pest side, and district 1, 2 and 12 on the Buda side. Due to the real estate market's latest blooming, the prices could be higher in these areas. If someone is looking for an investment to rent out, it makes sense to choose a real estate with good access to the metro lines.
Is it worth buying an unrenovated apartment?
Buying an unrenovated apartment can be beneficial. If the property has a good price (eg.: due to the condition, or the owner want to sell it quickly) after purchasing, added value can be realized by renovation. A freshly renovated apartment is always more attractive to the resale and rental market. Or if you want to style the property for your needs, it is easier to accomplish and doesn’t have to make compromises with the style and taste of an already renovated apartment. Lastly, you have to consider that a property renovation requires time, effort and - more importantly - a good renovation team.
Are there any new projects currently in Budapest?
Budapest has a lot of newly built projects running currently, many developers -old and new ones- decided to start their projects. You can find more information and the latest news about developing areas in Budapest here.
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Renting out a property in Budapest
What is the term for a long-term lease?
In most cases, we're talking about a one-year contract. There are some cases where the parties can arrange a half-year contract e.g. when the tenant's a foreign student and they are here for just one semester. With a one-year contract, the parties can decide to extend the lease or terminate it at the end and don't have to wait several years to get a new tenant/move to another flat.
WHAT KINDS OF OVERHEAD COSTS OCCUR WITH AN APARTMENT IN BUDAPEST?
There are utility and maintenance costs associated with a real estate. The utility costs include electricity, water consumption, gas consumption (for heating systems and stoves) and common cost. Common cost is only applicable if it's an apartment located in a condominium and calculated based on floor area. Usually, there's no common cost with owning a house but instead, there are several other services to pay e.g. garbage delivery fee, house insurance. Maintenance costs can occur unfortunately anytime when owning a property. These are necessary to carry out to keep or raise the value of the real estate. It can vary between necessary repairs of the heating system, electric appliances to decoration and aesthetic works such as painting or buying new furniture.
Utility Services are on the landlord’s or on the tenant’s name?
The rented property's utility consumption must be paid by the tenant in almost any case. Most owners keep their public utilities in their own name, tenants gives the owner the amount of the monthly bills and then the landlord pays the utilities. At the end of the lease, they calculate the last bill or wait for it to arrive from the provider. With this method, you can be sure that your payments are on time and you will not risk any outstanding debts.
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Taxation in Hungary
What tax obligation do I have for renting a property if I rent it for a long period of time?
Personal income tax is payable in this case, which is 15%. It is an international principle that the real estate is taxed where it is located, so the income from Hungarian property is taxed in Hungary. Long-term leasing is a tax-exempt activity, so it can be hired without VAT.
What taxation obligation do I have for a rented property if I rent it for a short period of time?
Short-term leasing is more complex and has a lot of administration. Basically, the income from this activity is 15% PTA, but 18% VAT is payable because this activity is already VAT. However, an annual tax revenue of 12 million HUF is eligible for tax-free form, which means that no VAT is payable.
Do I still have to pay tax here if I pay tax at my home country?
As a general rule, the property is taxed where it is located. Therefore, the tax on income from Hungarian property is payable in Hungary.
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Interested in buying a property in Budapest?
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Prices of apartments are indicative only. Pricing and availability should be confirmed with Tower International.
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