Budapest District VIII

don,
it might make no logic that when you pay 25% tax in Hungary and the remainder of 17% tax to the irish revenue to make up 42% but isnt that what the double taxation agreement is all about. That you must only pay tax once and not twice.

Now i know what you said about Irish tax less deductions on the total amount of Income, but ive been told by the revenue that you get a tax credit from the Hungarian authorities for having paid 25% . and that when you get you're Irish tax totalled and multiplyed by 42% that then theyll take youre 25% into account by deducting that from you're total tax would you be able to confirm or deny that for me as it seems to be very complicated indeed.

Thanks don for info on the tax rate in Hungary

Seanieboy,

Let's presume the following for the year:

Rental Income in Budapest is €5000.
It cost €4000 for fixtures and fittings
Repairs to property €200
Mortgage Interest €3,500 in Ireland(Equity release of €100,000)
Management(Estate agent) fees in Budapest €600
You pay tax at 42% in Ireland
Health levy is 2%
You are PAYE therefore do not have to pay additional PRSI on Rental Income


Tax Liability in Hungary:
€5000 x 0.25 = €1250


Tax Liability in Ireland:
Rental income €5000
Less Repairs €200
Less Fees €600
Less Mortgage Interest €3500
Less Wear & Tear (12.5% of €3500) €437.5

Rental Profit €262.5

Irish Tax + Health Levy @44% €115.5
Less Tax already paid in Hungary €1250
Irish Tax liability -€1134.5

That is you will not have to pay tax in Ireland, since your tax liability in Hungary exceeds what you would have to pay in Ireland. I will have to check put I'm not sure if you could treat €1134.5 as a rental loss in Ireland and carry it forward to the following year.

If anyone thinks I'm wrong above, I'd be delighted to know!

thanks don,
ya i made it up that way also and came to a figure that maybe meant a loss and didnt know what that figure might have been. I have been told however that Irish tax liability is very small once you have paid youre Hungarian tax and Id also like to know if you could carry this loss forward to next year . also you have wear and tear at 12.5% of €3500. Im paying €7000 for the fitout of this appartment approx with furniture and fixtures in kitchen etc what should i claim for in wear and tear from this

Hi emnc,
I contacted Budapest & he did a lot of work for me. Looked at loads of classic apts & narrowed it down to what I might like. Saved me a lot of legwork & time. He also knows the areas well...
I'm now in the process of buying an apt on Andrassy in the most beautiful Embassy area.......at Hungarian prices as opposed to "Irish".
I can highly recommend his services......which are continuing as I still have to sort out Management agencies, solicitor bank etc.
If you're heading out to Budapest.......and please do before you make any decisions - why not hook up with him for a few hours ?
The difference between the Brochures & the reality amazed me .....

love to meet up with budapest also but the thing is i have already booked my apartment and need to know of a reliable accountant to do returns for me and a really good management company that you can actually get receipts from for a tax return because as ive found out that a friend of mine whos got a property over there says she finds it very difficult to get receipts from them for her irish tax return . shes had to open a buffer bank account so that when the funds go down she has to credit it again, but she lets it run low until they ask her for money and she wont give it until she gets those receipts from them . so id love to hear of some company that you can actually rely on

seánieboy said:

thanks don,
Im paying €7000 for the fitout of this appartment approx with furniture and fixtures in kitchen etc what should i claim for in wear and tear from this

Click to expand...

Well I'd get the management company to give you breakdown of the €7000 eg €1000 for their fitout service and €6000 for fixtures and fittings. The fitout fee would be an expense totally deductable against your profit in the first year and the €6000 would be dedcuted over 8 years.

The €7000 seems quite high. You must be getting top of the range?

well don,
when i havent signed the dotted line just yet but when i was discussing the fit out with mason estates in Dublin they said that the package was €7000. They said the package would be top of the range .

youre probably right that its expensive but i was also told it might be 4% cheaper by the time i get the appartment as the vat rate dropped from 25% to 20% on january 1st. it is something i havent really thought about much only that my first years rent is going to go into buying this package.

The rent is guarenteed at 5% for the first year so that looks after it.critisisms welcome people regards don

Hi Bpartner,

I've been living in Budapest myself as well for a few years now and have had numerous conversations with estate agents, property journalists, investors and real estate developers, who claim that there are more apartments than tenants in the city at the minute. Most investors I know have dropped their asking rent to get a tenant and in my experience, a reasonable rent for a newly renovated 2 bedroom apt in a good location is 400 euro per month. This is backed up by facts, knowledge and I have countless examples that I could mention. Out of all the expats I know over here, nobody is paying more than 400 for their apartment. Everyone I know lives in Districts V, VI or VII. I don't agree with your figure of 600 euro. In my opinion, it is inaccurate. If your company can get 800 euro for a new 2 bed apartment then I am genuinely very interested in how it is achieved and who will rent at this price. Student or young professional expats won't pay 800 euro for a 2 bed, so does this mean that you rent to corporate clients?

Best regards,
Budapest

Self-advertising posts from first-time posters are usually deleted by the moderators as these generally contravene AAM posting guidelines.

Until someone gets around to doing this, the above post from Bpartner should be treated with extreme scepticism.

Hi Bpartner,

I have used actual examples. It is 100% true that the people I know over here live in V, VI and VII and they all pay 400 euro or less for their renovated apartments. Of course, some apartments are more expensive but I know for a fact that 400 euro will get you a high standard fully renovated apartment with two bedrooms and modern furniture in V, VI and VII. Also, I am living in Budapest at the minute.

I'm not sure what you mean when you say that property journalists, real estate agents and developers are not familiar with the characteristics of the Budapest market.

My main query is what type of tenant will rent one of the numerous high spec new apartments e.g. Szinyei Merse Haz? I am genuinely interested.

Thanks,
Budapest

Bpartner,

What rent would you charge to rent a 70 square-metre, classic refurbished nicely furnished ground-floor, street-view, one-bed apartment in district 5 before tax, with a parking space?

And the same question to you, but this time without a parking space?

Thanks

Just give me your best guess, eg 350-450. I need to know whether its worth getting a parking space or not.

hi there,
Im buying a 70 square metre 2 bedroom appartment on akacfa utca 26. Its a new build by hexacon homes and they havent been built yet.The building is going to be u-shaped with a courtyard behind it and my appartment has got a balcony front and back for maximum light effect. Is it too early to ask what it might gain in rent as they havent even started building yet(as of yet its a car park). I also thought that i might buy a car space as there seems to be a big need in the city for parking as ive seen people parking in the craziest of places in the city (ie traffic islands) Ive bought a car space. could anyone tell me is this area a good buy and what rent i should hope to acheive on it realistically

by the way the appartment will be on the 4th floor with underground parking

Hi Bpartner,
I've looked up your site. I see you give ideas of rental prices but where do you advertise your rentals ?
I was curious to see what was on your books...

I am in the process of buying an an 80sqm 2 bed apartment ( ground floor & courtyard facing) on Andrassy, in the embassy region. It's in very good condition but no parking space....

I will soon be looking for a management agent & possibly advice & help on furnishing.

Your charge structure seems quite competitive & I might be interested in meeting with you next time I'm over..

Can you give me a realistic idea of what my rental prospects are ?

Hi Bpartner,
Its actually an Upper ground floor apt with a view of the garden....sorry I wasn't sure of the difference till I re-read the details.
As for looking for a higher apt , I don't see many for sale actually on Andrassy Ut & it's a fabulous location, just a short walk down from Heroes Sq & surrounded by beautiful buildings.
This apt I might add is very bright & warm & in a lovely condition.
I plan to go over at Easter & might pay you a visit to discuss

bpartner im going over to Budapest on the 22nd of this month and might also pay you a visit to discuss property management. Im pretty positive about this transaction and the location of akacfa utca with 2 bedroomed apartment on 4th floor with balconies front and back and car space seems very attractive to me and the time frame for paying for this property suits my criteria. Im buying as an individual and thinking of getting an accountant over there to do the tax returns for me would that be a good idea ( i think it would) but would like an opinion. And when a person gets someone to manage the apartment for him is it really hard to get receipts from the management company. I know of a few people that have got trouble in getting receipts, as in Ireland you can claim the tax relief for you're Hungarian apartment, because as you know you cant just do that in Hungary??.

Cheers Bpartner

That was very informative - anything else you would like to share dont be shy!!

Thanks for your reply Bpartner. I think it's fair to say that most of us on this site have heard horror stories of Management companies in Budapest, for exactly some of the reasons you mentioned.

I am certainly interested in talking with you when I go over. You will be doing yourself a big favour if you prove to be all you say. Word spreads quickly in this country about good as well as bad agencies.

95k for an apartment on which the rental income is only 480 Euro a month furnished???? Thats only a little better than 6%!!! Seems very expensive guys!

I'm living in Romania and getting 8% on my apartments plus up to 25% capital gain in 12 months. That said rental income on the commercial property I own is 12% so I'm strongly considering selling the apartments and buying more shops.

Property here is easy to buy (always use an excellent specialist lawyer), cheap, the returns are great and why look anywhere else!

Scott