Published: December 01 2023
A new regulation regarding the CSOK Plus loan program has been published in the Hungarian Gazette. The details of the program are largely in line with the previously released draft legislation, but there are also some surprises for new applicants. Additionally, there will be changes to the tax exempt status for CSOK recipients next year. This article will provide an overview of the new regulations and benefits of the CSOK Plus loan program and tax exemption in Budapest.
Changes to the CSOK Plus loan program
The recently published regulation includes the specific conditions for the CSOK Plus loan program that will be available starting from January 1st. While many of the requirements remain the same as outlined in the draft legislation, there are some additional details that were not previously mentioned. One important change is the introduction of a transitional period for couples who have a child born between January 1st and March 31st, 2024 or have adoption approval during this time. These couples will have until March 31st, 2024 to apply for the loan after fulfilling the requirements of having a child. This concession is similar to what was previously implemented for the babaváró loan program, where parents who had a child before applying for the loan had one month to submit their application. This allows families to avoid the stress of dealing with banking procedures during the final stages of pregnancy or with a newborn. Furthermore, this means that couples can receive the loan and interest subsidy without needing to have another child, and they can also benefit from the waiver of up to 10 million forints in capital after having their next child.
Changes to property transaction taxes
Alongside the details of the CSOK Plus loan program, amendments to the law regarding property transaction taxes were also published. These changes specifically affect those who will be taking out the subsidized loan next year. With the CSOK Plus program, borrowers are exempt from paying the normally 4% property transfer tax for real estate valued up to 80 million forints. For properties valued above 80 million forints, the tax is only applicable to the portion above this threshold. For example, if an individual purchases a property worth 100 million forints, they will only have to pay the tax on the amount over 80 million forints, which would be 20 million forints, or 800 thousand forints. If the tax were to be paid on the total purchase price, it would amount to 4 million forints. Therefore, by utilizing the CSOK Plus loan program, families can save an additional 3.2 million forints in taxes in addition to the interest subsidy.
Clarification of rules for non-first home buyers
According to the previously released draft legislation, couples who purchase a second property using the CSOK Plus loan program would need to acquire a new property with a value higher than their previous property. For example, if their previous property was valued at 50 million forints, their next property would need to have a higher value. However, the final regulation clarifies that the couple only needs to purchase a property with a higher value than what they previously owned. This is important because it is possible that the couple may not have been 100% owners of the previous property, for example, if another family member held partial ownership. Using the previous example, if the property was worth 50 million forints, but the couple only owned 75% of it before the sale, the next property would only need to be valued at more than 37.5 million forints.
Standard conditions and benefits of CSOK Plus loan program
The basic conditions and benefits of the CSOK Plus loan program remain the same as previously known. For each child, families can apply for a maximum loan amount of 15 million forints for the first child, 30 million forints for the second child, and 50 million forints for the third child. The interest rate during the subsidy period is capped at 3%, but banks may offer lower rates. It's important to note that in the first year of the loan term, only interest needs to be paid, resulting in lower monthly repayments during this period.
Questions & Answers
What is the CSOK Plus Loan Program? The CSOK Plus Loan Program is a government initiative in Hungary that provides financial support to young married couples who are planning to have children or already have children. It offers subsidized loans and interest rate subsidies for home purchases or renovations.
What are the new benefits of the CSOK Plus Loan Program in Budapest? The new benefits of the CSOK Plus Loan Program in Budapest include increased tax exemptions and revised eligibility criteria. The program now allows couples who have a child between January 1 and March 31, 2024, or who are granted adoption during this period, to apply for the loan after fulfilling the childbirth requirement. This means they have until March 31, 2024, to submit their loan application. Additionally, the legislation has changed the property transfer tax rates, providing an exemption for up to 80 million Hungarian Forint (HUF) for CSOK Plus loan applicants.
Who is eligible to participate in the 2022 Census in Hungary? Every long-term resident of Hungary, both Hungarian citizens and foreign nationals, who have been living in Hungary for at least 3 months as of 1 October 2022.
What are the changes to the property transfer tax laws in Hungary? The new legislation regarding property transfer tax in Hungary states that CSOK Plus loan applicants are exempt from the 4% property transfer tax up to an amount of 80 million HUF. If the purchased property exceeds this value, the tax is only applicable to the amount exceeding 80 million HUF. For example, if the property is valued at 100 million HUF, the tax will only be applied to the 20 million HUF exceeding the exemption threshold, which amounts to 800,000 HUF. This means that by utilizing the CSOK Plus loan, families can save an additional 3.2 million HUF in taxes.
Does the CSOK Plus Loan Program have any changes regarding the purchase of a second property? According to the initial draft, couples who already own a property would need to purchase a new property with a higher value than their previous one when using the CSOK Plus loan. However, the final regulation clarified that the new property only needs to have a higher value than the percentage of the previous property that the couple owned. For instance, if the previous property was valued at 50 million HUF, but the couple owned only 75% of it, then the next property would need to be valued at least 37.5 million HUF.
What are the conditions for receiving the CSOK Plus loan? The eligibility criteria for the CSOK Plus loan include being a young married couple, undertaking at least one child, and meeting certain income-related requirements. The loan amount depends on the number of children, with a maximum loan amount of 50 million HUF for couples with three children. The interest rate during the subsidy period is capped at 3%, but banks may offer even more favorable rates. The first year of the loan period only requires interest payments, resulting in lower monthly installments for the couple.