Co-investing in Budapest real estate – models in comparison

Co-investing in Budapest real estate: This is how the legal protection works

Become a partner from just €75,000 – with secured ownership, ongoing rental income and professional management.

Partial ownership can be secured using the following models:

Model A:
Civil law involvement
with land register shares

Civil participation is a simple way to invest together in a property. Each investor is registered directly in the Hungarian land register. The collaboration is regulated by a contract - ideal for small groups of up to four people who want a clear ownership structure and low ongoing costs.

The most important facts at a glance

structure

• Each investor is registered proportionately in the land register
• The collaboration is regulated by a civil law partnership agreement
• An administrator (e.g. co-investor or service provider) takes over operational management

Advantages

• Maximum legal certainty (ownership in the land register)
• No accounting requirements, low running costs
• Income is considered private capital income (often tax-free according to the DBA)

Disadvantages

• Decisions are usually only possible unanimously
• Sale only with land register change (notary)
• No automatic limitation of liability

Tax treatment

• 15% income tax on 90% of rental income (flat-rate operating cost regulation)
• No corporate tax
• After 5 years of holding period: sales profit tax-free (in HU & DE)

Cost

• Contract creation approx. €800 one-off
• Administrative costs through external service providers (administration, tenant support, tax returns)

Exit/inheritance

• Sale of the share possible with a notarial deed
• Inheritance: tax-free in Hungary

Model B:
Kft structure
(Hungarian GmbH)

The Kft structure is ideal for larger investor groups or projects with professional requirements. The property is held by a Hungarian corporation in which the investors own shares. This solution offers clear role distribution, easy share transferability and high scalability - but with higher administration costs and somewhat more complex tax treatment.

The most important facts at a glance

structure

• Establishment of a Kft (Hungarian GmbH)
• The property belongs to the Kft, investors hold shares
• Accounting, balance sheet, taxes by tax advisors

Advantages

• Professional structure, well suited for groups (5 people or more)
• Share sale possible without changing the land register
• Clear representation rules in the partnership agreement

Disadvantages

• Higher costs (foundation, bookkeeping, accounting)
• Dividend distribution is taxable in Germany
• No direct land register entry for investors

Tax treatment

• 10% KIVA (small business tax) on company profits
• 15% withholding tax on dividends (creditable in DE)
• After 5 years: Real estate sale by Kft tax-free
• Sale of Kft shares: always taxable in DE

Cost

• Start-up costs approx. €2,000
• Ongoing accounting: approx. 80€/month
• Annual balance: approx. €250/year
• Account management: approx. 15-20€/month

Exit

• Sale of company shares (regulated by contract)
• No notary or land register changes necessary

Comparison table: Kft vs. private model