Rental Property tax in Budapest

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PeterLynch

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Hello,

Does anyone know how much on average it costs to get your annual rental tax returns filed in Budapest? How aggressive is the Hungarian in chasing foreigners for income tax?

Thanks
Peter
 
If it's just for one apartment, then around 60 euro should be enough to file your annual return. 2008 returns should be made by May this year.
 
I have just received my accountant’s calculations for my first Hungarian tax return on a property this year, which includes arrears. She has calculated it at 18% on 90% of income. She has also included a Social Insurance Contribution at about 12.5%. I’d really appreciate advice on two questions before I pay it:

Do I have to pay SIC even though I don’t live in Hungary?

The 18% tax option doesn’t allow me to deduct furnishing and maintenance costs which have been high! My first manager charged about €9,000 for awful furniture for my 3-bed apartment which I’ve had to replace and I had expensive maintenance issues this year. There is a big gap between my gross income and the actual net income lodged in my account, is there a better option that would allow for costs?
 
Unfortunetly I belive that the tax is correct in that you cannot deduct things from it i.e. furnishings and maintenance. However, I am unsure of SIC payments - something that I need to find out also pretty soon.
 
this is my first time doing my tax in Hungary and i am looking for an accountant to do my return for me. does anyone have a reccommendation.

Also i am taking the tax option of the 25% flat tax in which you cant deduct any expences but the upside of this is that once you prove that youre after paying tax in Hungary and using it as a tax credit at home you can deduct all you're expences from hungary at home for the remaining 16% that is if you're on the high rate of tax in ireland of 41%. look up www.revenue.ie the leaflet it70 will show you what you can claim here at home. furnishing or improving of you're apartment gets you a deduction of tax in ireland at 12.5% per year for 5 years.

I was under the impression that you could claim expences if you were going on the 18% option of tax in Hungary. but the downside of that would be that you couldnt claim expences then in ireland therefore you would have to pay the remaining 23% that is if you were paying the high rate of tax of 41% in Ireland.

also i don't think you pay a health levy or a social insurance contribution if youre not living in the country could someone confirm this. there is a good website called www.globalpropertyguide.com
 
I believe the tax rules have changed this year, and yes you can claim expenses with the 18% option - at least that is the same impression I got whilst speaking with my accountant.
 
Budda said:
She has also included a Social Insurance Contribution at about 12.5%. I’d really appreciate advice on two questions before I pay it: Do I have to pay SIC even though I don’t live in Hungary?
Click to expand...
No, you shouldn't have to pay this. Some accountants make this mistake in Hungary.
Budda said:
She has calculated it at 18% on 90% of income
Click to expand...
Your accountant is applying the option of a standard 10% (non-receipted) expense deduction. It's also possible to provide receipts and ask her to use them instead.
 
Thanks for your replies; it was a big worry as I appeared to owe more tax than my net income! The recommended website is very useful and confirms the advice
 
I have provided receipts for my accountant but she is making limited use of them. According to her ‘since you are a private individual, your possibilities are restricted’? For example, I incurred costs of 458,725Ft in 2008 for which I have receipts yet she is allowing a deduction of only 118,100Ft from my gross income. I can’t find any reference to this restriction on the link http://en.apeh.hu/taxation/rent_of_real_estates.html which says for the the 18% tax option ’income is either 90% of the revenues (rental fee + reimbursed utilities costs) or the difference between incomes and actually incurred, substantiated costs’.

I also have 85750Ft in receipts from my visit in 2007 to inspect my property but she is allowing 71.337 Ft because some don’t have my name on them. Is she being over zealous? Surely if I have a taxi receipt for paying cash it’s proof enough that I incurred this cost?
 
In Hungary, official receipts and invoices are very different to in Ireland. Without knowing the exact details of the situation, I can't be sure, but your accountant is more than likely correct. Your name would need to appear on every receipt. In addition, invoices can only be issued from official invoice booklets.

There are also limitations in relation to the possible expenses, which you can use to deduct. Quite a lot of expenses are not tax-deductable.
 
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