Rental income from residential property in Hungary is subject to tax, regardless of whether the owner is resident in Hungary or not. If you own a rental property in Hungary, you have an obligation to declare this income by submitting a tax return to the Hungarian tax office each year.
An individual is considered non-resident in Hungary if s/he does not spend 183 days or more in any tax year in Hungary or does not have their primary residence there.
In Hungary, you can choose to either pay income tax on 90% of the received income or pay tax on the actual profit i.e. received income with actual incurred costs in relation to the rental property deducted.
Local Hungarian Property Tax
If you own a property in Hungary, you’ll also have the pay property tax. The amount you pay depends on the location where the property is situated. The average cost per year is around €3 per sq/m or a maximum of 3% of the market value of the property.
Hungarian Capital Gains Tax
Capital Gains Tax is payable on the sale of a Hungarian property. The current rate of CGT in Hungary is 16% and is payable on the profit in disposal i.e. the difference between the sale price and original purchase price plus any related expenses. If a property is owned for more than five years, a CGT reduction of 10% per year applies. If a property is owned for more than 15 years no CGT is payable on the sale of the property.
UK & Irish residents
If you are resident in the UK or Ireland you will have to report any income received in Hungary on your annual resident tax return (i.e. your Irish or UK tax return). There are double taxation agreements in place between Hungary and Ireland and Hungary and the UK so double taxation relief will usually apply. Your PTI Account Manager can advise you about double taxation relief and/or filing your resident tax return.