Advantages of obtaining a property in Hungary
Hungary boasts a strategic location in the heart of Europe and enjoys a mild south-central climate that provides great weather from March to mid-October. With Wizzair, the Hungarian airline, offering connections to hundreds of destinations across Europe every day, including over 30 flights to London daily, it's a great hub for travel.
Real estate prices are moderate, ranging from 1.5-3k EUR/m2, and offer a growth yield of around a reasonable 6%. Tourism has steadily increased over the last 25 years from 3 to 9 million visitors per year, making it a popular destination for travelers.
Hungary's economy is stable, with a growth rate of around 5% annually and a decreasing national debt. The unemployment rate is very low at 4.5%, making it an attractive place for job-seekers.
Budapest, the capital city, is a great expat center, with a diverse community of EU citizens, Russians, Chinese, and other nationalities. The Hungarian passport offers visa-free travel to all Schengen countries, the US, New Zealand, the UK, Australia, and Canada, making it a convenient base for international travel.
Hungary's healthcare and education systems are quite good, providing access to quality medical care and education for residents and expats alike.
Residence permits on the grounds of owning real estate
To invest in property, a minimum investment of 250,000 EUR is required for personal ownership. While incorporating a company may be a cost-effective option, it is not recommended for those who only intend to own a single property.
Residence permits on the grounds of company formation
If you plan on generating revenue from leased properties, setting up a company to own the property can be a viable option. With a minimum investment threshold of 180,000 EUR, the company can also be involved in other areas of business besides property management. When it comes to rental income tax, you have a choice between two options: 10% of the gross income or 15% of the net income. Additionally, you can deduct any relevant costs when submitting your taxes to the tax office.
Other residence types in Hungary
Foreign entrepreneurs can participate in the foreign investment program through business formation with a minimum investment of 50,000 EUR. However, it's important to note that becoming an EU national is not possible before applying for this type of visa. As part of this program, business owners become the controllers and pay taxes as hired employees. It's worth noting that the government bonds residency program, which offered residency based on investment, was suspended in 2017 and is no longer an option.
Which residence permits offer a path to permanent residency and citizenship?
All the previously mentioned programs open the path to permanent citizenship after 8 years of temporary residency.
Restrictions & Challenges
The cost associated with buying and selling a property in this country is approximately 10% of the property's value. Taxes involved in the purchase include a stamp duty of 4%, a VAT of 20%, and legal costs of 1%. Non-EU citizens will also need to pay an additional 200 EUR as a permission fee. Capital Gains Tax (CGT) is set at 15%, although the rate can be decreased based on how long the property is held. The longer the property is held, the lower the CGT, and there is no CGT after 5 years of owning the property.
After holding temporary residence for 8 years, applicants and their dependents (such as spouse and children under 18 years old) can apply for citizenship. However, passing a language test is required for the citizenship application.