Q: In Budapest, what are the best areas to invest in?
A: To answer this question we are assuming that you are looking for a rent income as well as for capital gains. The best areas are the 5th, 6th, 7th, 9th and 13th districts.
Q: What are the average prices of properties per square meter in Budapest?
A: There are many parameters to take into account in order to define the price per square meter, but in general we can say:
• 5th district 1200-1500€ per sqm.
• 6th district 1100-1300€ per sqm.
• 7th district 1000-1200€ per sqm.
• 9th district 1000-1300€ per sqm.
• 13th district 1100-1500€ per sqm.
Q: What capital gains can I get from renting the property?
A: 5 to 7% a year in most of the properties.
Q: Where and for what kind of flats is the highest demand of rentals?
A: In the 5th and 6th districts, 60-80 sqm, nicely renovated and fully furnished flats.
Q: Who are the tenants?
A: mainly foreign students and business people.
Q: What is the tax on rent?
A: If the apartment is owned privately (not by a company), then the tax is 20% of the rental income when renting a residential property to an individual or a business. Foreigners must apply for a tax I.D and issue an invoice to the tenant. Companies only pay the 18% corporate tax on profits - in case a profit does exists.
Q: Do I have to pay an income tax when selling the property?
A: Yes. Depending on the way you made the purchase (as private 20%, or as a company 18% on the registered profit +20% dividends) and the tax plan back at your home country.
Q: Can a foreigner get mortgage to purchase a property in Hungary?
A: No, not yet.
Your stay in Budapest
Q: How long does one need to spend in Budapest?
A: It is possible to purchase a property without even coming to Budapest! From our experience, three to four days are enough to get all the information on the real-estate market of Budapest and be able to choose the right property.
Q: What do we need to bring with us to Hungary?
A: Not much: a passport, 1000 €, and a good mood.
Administrative and legal aspects
Q: Can foreigners buy a property in Budapest?
A: Yes, a foreigner can buy a property in Budapest.
There are two ways to do it:
As a private person you need to apply for a permit. But you might be denied the permit, which delays the purchase and leaves the buyer in a state of uncertainty for approximately 2-3 months. It is recommanded only if you don't want to use the second way (detailed below). In most cases the permits for private persons tend to be denied only if one already owns a property in the same district, as it is considered as a speculative purchase, or if the process was not accepted.
To Establish a hungarian legal identity (to register a company) owned by the foreign investor himself. The cost of this action is approximately 2000 € to set up the company and 400 € per year to run the company.
Q: What happens if the request to purchase as a private person is denied?
A: When the permit is denied for a private person, then you have three options:
1. Establish a company within a very short time
2. Find a friend or relative who can purchase the property without permission (unlikely in most cases)
3. Abandon the idea of purchasing a property in Budapest (receiving back the deposit).
Q: How are most of the properties bought?
A: Most of the investors choose to establish the hungarian legal identity (company) for the following reasons:
1. It\'s the fastest and easiest way to purchase a property.
2. The registration process is short (less than a day)
3. Once the company is established there is no limitation whatsoever on purchasing one or more properties in Hungary.
4. With the right tax planning you can reduce your tax liabilities when selling the property later on, or on your renting income.
Q: How difficult is it to establish a company in Hungary?
A: It is not difficult. We organize in order for you to be escorted by our agent through all the process. There are three steps to be followed to establish a company:
1. The lawyer will have all the paperwork made upfront
2. Make a specimen of signature at the notary.
3. Open a bank account.
Purchase and additionnal costs
Q: What is the time needed to conclude a purchase?
A: 4 to 8 weeks
Q: What is the registration form of the properties?
A: there is a land registry office that keeps all the data computerized, and to which we can ask for an ownership form (property page) whenever needed.
Q: How much is the down payment when securing a property?
A: 10-20% of the purchase price is the amount of the deposit needed to be paid (to the lawyer's trust account).
Q: What are the additional expenses when buying an apartment?
A: In general you should calculate 7.5% of the purchase price (1.5% solicitor's fee, the purchase tax is 2% for the first 4.000.000 HUF of the purchase amount and 6% for the rest of the amount, 1000 € for the company - or 250 € if you buy as private - and 200€ for other fees.)
Q: What are the fees for finding a tenant?
A: One month rent plus 25% VAT paid upon signing the contract in case the apartment is rented for a year, 10% of the total rental fee when the apartment is rented for less than a year.
Q: What are the fees for property management services?
A: 8-10% of the monthly rent.
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