Published: May 18 2023
If you're considering investing in real estate or moving to Budapest, one of the first things you'll want to know is how much tax you can expect to pay on property in the city. This guide aims to provide you with all the essential information about annual property tax rates in Budapest, Hungary's lovely and vibrant capital.
What is Property Tax?
Property tax, also known as real estate tax or ad valorem tax, is a levy imposed by the government on a property owner. The amount of tax depends on the assessed value of the property and can vary based on location and property type. In Budapest, property taxes are collected by the local government and are used to fund various services such as public transportation, education, and infrastructure.
How is Property Tax Assessed in Budapest?
In Budapest, the annual property tax is calculated based on the size and use of the property. There are two main types of property tax: the building tax and the land tax. Each one has a different rate and is calculated using specific criteria.
The building tax is charged on residential and commercial properties. The tax rate is determined by the local government and can be different for each district of Budapest. The tax rate is applied per square meter of the total floor area (TFA) of the building.
For residential properties, the building tax rate ranges from HUF 800 to HUF 1,700 per square meter per year. On the other hand, the rate for commercial properties ranges from HUF 1,800 to HUF 3,910 per square meter per year.
The land tax is charged on vacant land and agricultural properties. The tax rate for land tax is also determined by the local government and can vary across different districts.
For vacant land, the land tax rate ranges from HUF 200 to HUF 450 per square meter per year. For agricultural properties, the land tax rate is calculated based on the property's taxable value, which considers factors like soil quality, location, and the type of crops produced. The rate for agricultural land ranges from HUF 550 to HUF 1,200 per hectare per year.
Are There Any Exemptions or Reductions?
Some properties in Budapest are eligible for exemptions or reductions in property tax. Exemptions are granted to specific properties or under certain conditions. Reductions on the other hand are based on the specific circumstances of the taxpayer.
- Properties owned by the Hungarian state, local governments, and some public institutions (e.g., schools, hospitals)
- Religious buildings and properties used exclusively for religious purposes
- Parks, forest areas, playgrounds, and certain sport facilities
- Certain agricultural lands that meet the criteria for ecological farming
- Properties used for rehabilitation or rehoming of economically disadvantaged individuals
- Properties under construction or in the process of renovation: up to 50% reduction for a maximum period of two years
- Long-term residents over >>> the age of 65: up to 50% reduction on the annual property tax
- Disabled property owners: up to 50% reduction, depending on the level of disability
- Property owners facing temporary financial hardship or unforeseen circumstances: up to 50% reduction upon application and based on local government evaluation
Please note that reduction and exemption eligibility, as well as the application process, may vary depending on the district. It is essential to consult with the local government offices for the most accurate information.
How Do I Pay My Annual Property Tax in Budapest?
Property tax bills are typically sent out by mail to property owners at the beginning of the year. The due date for paying the annual property tax is May 31st. Payments can be made at local government offices, through postal cheques, or via electronic fund transfers using the provided bank account numbers. Make sure to keep records of your payments, as this is essential for future tax declarations or in case of any discrepancies.
Considerations for Foreign Property Owners
If you are a foreign property owner in Budapest, it is important to familiarize yourself with annual property tax requirements and procedures. You are responsible for paying the property tax in the same way as Hungarian citizens.
Here are a few helpful tips for foreign property owners:
- Make sure to keep your contact information updated with the local government office, so they can send notifications and tax bills to your current address.
- Consider hiring a local property management company or tax advisor to help you navigate the tax system and process, particularly if you don't speak Hungarian.
- Keep accurate records and documents related to your Budapest property, such as purchase contracts, invoices for renovations, and tax payment receipts. These will be essential for your annual tax declarations and potential tax exemptions or reductions.
Understanding Budapest's annual property tax is crucial for any homeowner or investor looking to purchase property in this beautiful city. While there are variations depending on the property's location and use, taxpayers can take advantage of available exemptions and reductions to minimize their tax burden. As a foreign property owner, seeking the assistance of a local tax advisor or property management company can be very beneficial in navigating Budapest's property tax system smoothly.