Budapest District VIII

thanks don
which begs the question is there a bank out there in Hungary that is user friendly that has the cirrus logo, internet banking and reasonable bank charges and if one decides to open a bank account over there does it take long to open it up or is it a drawn out affair
 
Hi all,
I've been following this with great interest as I am thinking of investing in Budapest also.
Does anyone know where you find the definitive guide about taxation on income from Hungary, be it from property or bank interest ?
It all seems very confusing & I'm trying to get a handle on it.
Seanieboy
The cirrus element of your atm card just means you can withdraw in any country. If you have an Irish one,you can withdraw from ATM's in any country in the Eurozone without cost - it's like using it at home. Outside the eurozone ( ie, where the currency is different) there is a charge of 3.5%, with min charge of €3.15. Not sure if it works the same coming this way from Hungary.
As a banker I'm hoping to get a bank a/c out there with a Cheque book that also has Online banking. Have my rent paid into a savings a/c....int rate is good there I'm told. Be able to transfer to c/a & then write a cheque & lodge to my a/c here if I need it. If you lodge foreign chqs to an Irish a/c you are just at the mercy of the daily rate, therefore no Cirrus charges. When Hungary adopt the Euro it will all be easier..

Also going to suss out the bank charges out there. I'm going out next week & if I find out anything interesting I'll let you know.

At the moment in BOI there is no charge whatsoever to transfer funds to Hungary once you have the BIC/SWIFT plus IBAN & other relevant details, provided you are happy to let it take 3 working days. I'm wondering what it's like the other way round.

Hopefully I'll be able to answer all these questions on my return.
 
I would also like to know about the definitive situation with regard to taxation both in Hungary and Ireland, if anyone could help it would be appreciated.
 
This is a basic explanation of taxes, which need to be paid, from the Duna House website www.dh.hu

Taxation:

Tax on rental income as a private person- flat rate of 25%
Tax for capital gains as a private person - 25% if the sale was executed in the first five years. After five years the tax is reduced annually by 10%.
Company tax 16% (relevant for the multiple buyers)
Capital gains for company 16%
  • If you buy as a company, then expenses are recognized (flight, accommodation, legal and agency fees, stamp duty, renovation costs, furniture, utilities and all associated services, including the interest on the owners' loan).
  • The tax rate for capital gains when a company sells an apartment is lower (16%)
  • If you buy as a private person, then no expenses are deductible on rental-tax calculated income.
  • Hungary has signed a treaty for avoidance of double taxation with many European and other countries.
Stamp duty:
  • On second hand apartments: 2% up to Ft4million and 6% for any part of the purchase price above that limit.
  • On new built apartments - the same but currently there is an exemption from purchase tax if the purchase price is less than Ft15m. And between Ft15m and Ft30m the rate is 6% but only on the part above Ft15m. If the purchase price exceeds Ft30m it is treated the same as resale.
 
Re Lodging Rent in Hungarian Bank:

The management company we spoke to (& albeit won't be using!) told us we had to open a bank account in Hungary as it was illegal to lodge rental income arising in Hungary to a bank account in another country.

valc
 
seánieboy said:
thanks don
which begs the question is there a bank out there in Hungary that is user friendly that has the cirrus logo, internet banking and reasonable bank charges and if one decides to open a bank account over there does it take long to open it up or is it a drawn out affair
Click to expand...

It only takes a few minutes to set up a bank account with most of the main banks. All you need to bring is your passport and driving license/credit card. And all the major banks will have cirrus capability as well as internet banking.
 
To me the biggest issue is whether or not to start a company to buy your apartment.

Budapest,
- how to you know for definite that mortgage interest can be deducted from rental income before tax for COMPANIES ONLY. Not questioning your information but need some kind of proof of this (without hiring a Hungarian tax expert) - can you point me to an english speaking website....

Anyway,
if you start a company this will cost say 1000 euro at the start, then you pay 16% tax on rental. Assume you can deduct all expenses including Hungarian mortgage interest from the rental income before paying the 16%. This will save a good bit. The best Hungarian mortgage I have been quoted on so far is @ 5.5% interest over 20 years @ 70% LTV for a repayment-type mortgage, which for 70K borrowed is approx. 300 euro/month interest. If you get 400/month in rent, then deduct 300 euro/month interest, then pay tax at 16% on 100 euro.............................you'll only pay 16 euro a month tax


You then have to pay 42% in Ireland (if on 42% PAYE) on dividends you pay yourself - which is 42% of whats left which wont be much......
 
yes from what the tax office has told me that if you pay paye in ireland and you have corporation tax to pay in Hungary then thats a mismatch of taxes that seems to be the term. and on the other hand if you have a company in Ireland and a company in Hungary then youre as they say on the pigs back . Im buying in district 7 and was toying with the idea of purchasing as ltd company and the attraction was being able to claim expences. Then as i was talking to the irish revenue they told me i could claim those expences here in Ireland the same as you would with an irish house no problem if i bought as an individual so to save all the hassle im going to go down the individual route in the next few months. In Budapest the solicitors and all legal people will try push the company route to you so i dont know whether that clears up anything for you
 
shaneo, just go to www.dh.hu and click on 'English'. The 'Buyers Guide' is further down the same page, linked from the first news item. This is where I got this taxation information from. But if you do set up a company, then you will also need to hire a Hungarian accountant and submit annual accounts.

Looking at the figures you give from one angle, it would seem that the company you might set up would pay very little tax. However, from another angle, if you're to take into account stamp duty, accountant expenses, vacant period expenses, maintenance, etc.., you will be left with only a tiny profit every month or more than likely owe money. Your mortgage would be almost 500, but your basic rental potential each month would be 400. In my opinion, Budapest is not like Dublin in that prices are not rising rapidly at the minute nor is there a well established rental market as yet.
 
Hi
By the way im buying as an individual. Id like to find out that when i get a management company to look after my appartment do they take care of paying the 25% tax for you or do you have to do it yourself. As a working man here in Ireland and not understanding the ins and outs of tax (even the irish tax returns to me is really hard) would i have to get an accountant to fix my accounts over there also?. Whats the usual thing to do over there regarding filing tax returns?
 
Not to put a damper on any of this but if you go to

www.dh.hu

and search under properties sales, district 6 only, you will find 159 apartments for sale. 159 seems like a lot of apartments to be for sale in what is a relatively small area of the city for a place thats supposed to be a good investment. if its such a good investment why are there so many people selling. Budapest, do you think this is a large number and if so whats the story...
 
shaneo, not sure if this is a big number or not, but there are thousands of apartments located in District VI. Like most of central Budapest, it is high density, so 159 may not be that many. Also, a lot of them are poor quality small properties, which sellers are trying to sell at relatively high prices or else overpriced new apartments.

Budapest has excellent potential to be a good long term investment. However, as with all property investment, there are no guarantees which way the market will go. You have to be careful and invest wisely. Don't rush into it and only buy when you have checked out every likelihood. Prices are fairly stable at the minute, so don't think you have to fly out and buy in the first couple of days. Also, bidding wars don't really exist over here so you won't be forced into buying something that you aren't 100% about.
 
Budapest

Do you know the area of Rozsa Steet around the junction with Dob street (in district 7). This is basically the heart of district 7. Is this similar to district 6 in terms of re-development, or does the area look delapidated at all. There are some apartments for sale in this area which are cheaper than similar ones in district 6 but they are the same distance away from Andrassy Av.

Any insight about this part of district 7, or the future of district 7 would be good

cheers
 
ive bought a new build on akacfa utca but it wont be ready for about 1 1/2 years and the place in where i bought is pretty central off the junction of wesselenyi utca its in the old jewish area and the area looks pretty much like it could do with a good facelift but was impressed with the area and its surrounds. I believe that district V11 is due next for renovation and looks pretty promising but i have been told that its all got to do with location in district V11. The area i was told to buy in was just inside the outer ring road of the city namely krt Erzsebet, the closest side to the city centre if that makes sense
 
I see what you mean Seanie - the place I`m looking at is about 6 blocks north-east of you, on the other side of that ring road. I cant see any major drawback with my one but could be wrong. i am closer to the big park and the millenium monument thingy than you - you are closer to downtown. Did they tell you that renewal work in the area will be concentrated inside that ringroad or what. I did a google earth (look at budapest close up via satellite) and you can spot all the new roofs around the city showing concentration of re-development. same number of new roofs throughout districts 6 and 7 up as far as the big city park - whole area including where you and I are has equivalent number of new roofs.
 
Seanie

i have an excellent jpeg done of district 7 - from google earth - show you what i`m talking about - send me private message and i`ll send it to you
 
Shaneo, this part of district VII is not well respected. You have to be very careful in this district in particular as some parts of streets are fine and others are bad. The parts of Csengery, Vorosmarty, Izabella, Rozsa utca on the district VII side of Andrassy (around Josika utca, etc.) are not desirable areas. The parts of the same street on the VI side of Andrassy are much better but generally speaking, the further you get to Podmaniczky (going from Andrassy), the worse.

Seanie, any development which is promised for VII is also not guaranteed. I would take it all with a pinch of salt. All of the city centre is improving, but it's going to take time. I don't think that VII will have any more likelihood of being renovated than any of the other central areas and VI in my opinion will get more money than VII as it's closer to the main attractions of the city.
 
Budapest

I see what your talkin about - thats exactly the kind of info I need. send me a pm and happy to send you an info i have - i have some time here to do research.

bear in mind that new developments in this area you`r talking about are about 10K cheaper per apartment than equivalent ones on the other side of andrassy. but i think your comments have put me off the one i was thinking about. (on rozsa u. near dohany). also, got some info back from the agent there and it looks like they`v only sold a handful of apartments in it out of about 70 and its due to open in august!

[broken link removed]

this is an interesing article from nov 2002 interviewing the mayor and going on about proposed renewal of district 7
 
Spoke with Budapest Partner management company www.Bpartner.hu re management in Budapest, they're a young couple starting out over the past 6 months, targeting new builds for letting to expats, recommend good furnishing for execs instead of students to get a better rent and they charge 8% management fee, no fee if apartment is empty. They recognise lack of competitiveness in Budapest and seem hungry to build up their business. When you ccompare to valc's 18% offer , you might want to consider. I asked them for some reference customers , will wait and see, I'm tempted.

killian
 
Hi Killian,

Interesting. I had a look at that website. I've been living in Bp for a few years now and really wonder who will be willing to pay their figure of e.g. 800 euro for a two bedroom apt in Szinyei Merse Haz. I know many expats over here, mainly professionals and I don't know of anyone who would spend anything like this. 400 euro per month will get you a large, newly renovated two bed apt in a renovated building in District VI, so if this company can get 800 per month for a new 2 bed, then I'd be very keen to know where the tenants came from. If they can find people to rent at these figures, then fair play to them, but I have my reservations.
 
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