The process of buying real estate in Hungary
Buying property in Hungary is quite easy: nowadays foreign nationals can also buy real estate without limitations (not counting in agricultural lands, which do have some restrictions). However the legal procedure has it's usual modus operandi and it's pitfalls, but with our investment services, you can avoid the hassle.
Firstly you will need a good solicitor, who will take you through the whole process for 1% of the sales price. After you have chosen the property and your solicitor has checked the owner's status at the Land Registry, you have to pay a 10-15% deposit and sign the purchase agreement which ensures the owner can not sell it to anyone else. Your solicitor will then file the contract of sale to the Land Registry and your name will appear as a "side note" on the ownership certificate, as the next owner. This is enough to prevent the previous owner from selling it or putting any mortgage on it. Once the total purchase price is paid you can take full possession, however, you are not yet fully registered. You can legally sell the property once your registration on the side note is confirmed. You have a choice of buying as a private individual or founding a company.
Setting up a company
If you intend to purchase several properties and may be doing other business in the country, founding a limited liability company is recommended. It's a relatively easy procedure to set up a company. Setting up a limited liability company (Kft.) will cost around 500-600 euro, The procedure takes 1-2 days, and a sum of 500.000 huf ( hungarian forints) must be deposited in a Hungarian bank for at least 2 days.
The monthly cost of accounting is approx 30,000 HUF even if there is absolutely no activity in the company, because quarterly tax sheets and other reports must be regularly filed. A certified accountant must be appointed. The owners of the company may be private persons and legal entities as well. They can be domestic or foreign nationals too. It is possible to have only one owner, however, in this case an auditor must also be paid annually. Corporate tax is 10%.
The lawyer will need personal details, a Hungarian address (usually that of the purchased property), a name for the company, and areas of activity specified (real estate sale, management, services). After the Deed of foundation is concluded, the specimens of signature need to be signed in front of a public notary. Meanwhile a bank account needs to be opened for the company and the registered capital has to be deposited. With the certificate from the bank, the solicitor can submit the Founding Document to the Court. As soon as the company receives a tax number, a registration needs to be handed in separately to the tax authorities, the local municipality, the chamber of commerce (not compulsory), as well as the social security system.
All the files must go to an accountant who will take care of everything and warn the owner of legal changes and payment deadlines. A company registered in Hungary can immediately become the owner of property without having to apply for a permit. In case you decide to sell the property, closing a company is not advisable, for it is a long and complicated process. Solicitors and accountants recommend selling it at a nominal value (with the property). If the main activity of the company is buying and selling real estates and sells the real estate within 2 years following the purchase, transfer duty is only 2%. Otherwise the transfer duty is 2% following only the first HUF 4 million of the purchase price, above HUF 4 million it is 4%.
Commission fee of leasing: one month of rental fee + VAT (paid by the lessor)
Commission fee of selling the property: 3 % +VAT of the selling price (paid by the seller)
Commission fee of buying the property: 2 % +VAT of the selling price (paid by the buyer)
Commission fee of management: one month of rental fee + VAT (paid by the lessor) con un minimo di 50 euro al mese + VAT
Lawyer fee: 0,50% - 1 % of the selling price