If the required licenses are secured from the local municipality, Indian people may purchase landed properties in the country relatively easily. The Hungarian Civil Code stipulates that when a landed property is purchased, a private contract or purchase agreement must be written between the parties. The agreement must also be countersigned by a Hungarian attorney, according to the legislation. Indian people should be aware that applying for permission at the regional administrative office might take two to three months. To avoid having to apply for any permissions when purchasing a property and shorten the acquisition process from months to days, it is often suggested to foreign organizations create a company in Hungary.
Main stages of purchasing a property in Hungary
Choosing a property and doing due diligence to ensure there are no recorded encumbrances are the initial steps in buying real estate. The Hungarian legal company will begin the processes for securing the required permissions with the local authorities once an agreement has been made, and after that, the property appraisal will commence. Following the completion of these stages, an attorney will create the real estate purchase contract, and the buyer will need to put down at least 10% of the purchase price. The acquisition procedure is concluded after receiving the required licenses from the administrative office and submitting the purchase agreement to the Hungarian Land Register within 30 days. The most crucial step in concluding the contract is to write a statement stating that the whole purchase price has been paid and that ownership of the property has been transferred.
Registration
Property must be registered in the country’s centralized Land Registry system after acquisition. The relevant registration maintains information on the area, use categorization, owner information, and encumbrances. By demonstrating the accuracy of the data, this information may be accessed by the general public to uphold the public trust. Additionally, it safeguards the rights of an honest buyer. It is impossible to conceal the identity of the real estate owner due to the public accessibility of the Land Registry. Therefore, the Land Registry makes the owner’s name, address, and business registration number (if any) available.
Taxation
Within two to six months after the Hungarian property’s registration, the buyer must pay a 4% tax on the entire acquisition price of the property. Indian citizens, who are not members of the European Union, must additionally pay the purchase permission charge, which amounts to around 170 euros. Additionally, owners of real estate in Hungary must be aware that regular maintenance charges are essential. A council tax, a water supply tax, and a village tax are often included in these expenses. Real estate is subject to land and building taxes, which are assessed by the appropriate municipality depending on the property’s location. These taxes are levied following the property’s floor area or market value. If you conduct any business operations on your real estate, the relevant authorities may increase your taxes; for example, they may apply corporate income tax as a result of your operations.
The reduced property tax rate in Hungary
When you acquire a piece of property in Hungary within three years of selling another one, the property tax is decreased; the tax consequences only apply to the difference in value or only if the purchase price is greater. If you are under 35 years old and purchase a house in Hungary, you will only be required to pay a 2% tax on the purchase price of the residence if it is less than EUR 40,900. You only have to pay property tax for the portion of a newly constructed house that is above EUR 40,900.
