Property sale in Hungary: How to sell your apartment as an expat?
To sell your Hungarian apartment, you will need a lawyer to create the contract between you and your buyer and to submit it to the land registry. You might also be required to pay a 15% personal income tax after the deal – however, this property sale tax might be reduced to zero in various cases.
Below we detail the aspects of property sale as a natural person. If the owner of the property is your Hungarian company, slightly different regulations apply.
Property sale in Hungary
Unlike in the case of property purchase in Hungary, you do not need any special license to sell your residential property. Once you have found a buyer, you will need a lawyer to verify the deal and submit the documents to the land registry. In Hungary, the lawyer is traditionally hired by the buyer, for either a fixed price or a commission somewhere between 0.5% and 3% of the purchase price. However, the parties may also decide to split the bill, or have their own respective lawyers represent their interests.
Normally, the language of the contract is Hungarian, but it is also useful if the contract is written in a language you actually understand. For this purpose, it makes sense to create a bilingual agreement. Alternatively, it might be enough to include a paragraph confirming that the content of the contract has been explained to you and you have understood it.
Since the land registry will want to send you a confirmation once the sale is registered, you must have a Hungarian address. In case you do not have one (e.g. because you are leaving Hungary), you will need a forwarding representative in Hungary who can receive the document on your behalf and forward it to you once it arrives.
Taxes on your income from the property sale
When you sell your residential property, you will be required to pay personal income tax on your income from the sale. Personal income tax in Hungary is 15%. The tax base is your income from the sale – which is not simply the selling price, but a sum reduced by various factors:
- The original purchase price
- The expenses related to the sale, e.g. advertisement, realtor
- Sum spent on adding value to the property, e.g. renovations
- Sum spent on maintenance within 2 years of the purchase if it was at least 5% of the current selling price
All of these deductions must be supported by relevant paperwork (invoices and the previous purchase agreement).
- In case you were not paid in money but in kind, the value of your payment (e.g. other property, car, etc.) must be indicated in the contract so your income can be properly calculated.
- In case the buyer pays in instalments, the basis of the calculation is still the full purchase price
No income tax after 5 years of ownership
The tax base is also reduced every year after your purchase. If you sell your residential property the same year you bought it, tax is calculated after your full net income. However, the tax base gradually decreases, and if you sell the apartment or house after at least 5 years of ownership, there is no income tax to be paid.
| Years of ownership | Tax base from the income | Percent of income to be paid as tax |
| 1 | 100% | 15% |
| 2 | 90% | 13.5% |
| 3 | 60% | 9% |
| 4 | 30% | 4.5% |
| 5 | 0% | – |
For this purpose, the date of purchase is the day when the contract is submitted to the land registry by the lawyer. This must happen within 30 days of signing, regardless when the contract is completed and payment is settled.
For example, the contract is signed on 30 November 2018. It is submitted to the land registry on 15 December, and registered to the buyer on 15 January 2019. For the purposes of calculating the personal income tax, the date of purchase is 15 December 2018. As a result, the property can be sold without the seller being required to pay personal income tax in Hungary starting from 15 December 2023.
Other tax-free cases of property sale
There are some specific cases when you do not have to pay personal income tax after property sale. Namely:
- When you are getting a divorce and you are selling your part of your former home to your former spouse
- When the sale price will cover the costs of a nursing home for the elderly or the disabled (or of a similar facility)
Pay the property sale tax when you submit your tax returns
If you are a tax resident in Hungary, you are probably familiar with the yearly tax returns. Your yearly income is supposed to be reported by 20 May the following year. This is also the deadline for paying your personal income tax. In case the sale was tax free, you do not have to include it in your yearly tax returns; however, you still must file the relevant document for yourself for at least the next 5 years, because the Tax Authority might ask for them during an inspection.
Check double taxation treaties
If you are a tax resident in both Hungary and another country, you might be required to pay taxes in both countries. Hungary has treaties with a great number of countries around the world which let tax residents avoid paying taxes for the same income twice, both in Hungary and their other country (commonly referred to as double taxation treaties). If you are not sure about where you should pay taxes, ask for the assistance of a tax advisor.
Avoid property sale pitfalls
While a realtor can help you find a buyer for your Hungarian real estate, it makes sense to learn about the property sale procedure to avoid possible pitfalls. If you have owned the property for more than 5 years, you can avoid paying a 15% Hungarian income tax, but make sure to also check the regulations in any other countries where you are a tax resident.
If you are selling your Hungarian property, we can add it to our portfolio shown to other expats searching for real estate, this way increasing your chances for finding a reliable buyer. Helpers Hungary offers comprehensive assistance to expats living and working in Hungary, with almost 20 years of experience working with administrative bodies as well as lawyers, accountants, and advisors.
How can we help you? Get in touch today to find out.
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