What additional costs apply when buying property in Hungary?
How much does a condominium cost in Budapest? And what return can I expect?
When calculating the return, it is essential that we include the costs of the purchase including all additional costs and that nothing is “calculated” here. This also applies to ongoing operating and administrative costs. We rely on transparency here - even if that means that the forecast return doesn't look as spectacular as you might secretly wish.
Many brokers argue with this Gross return since this is getting higher and higher, but has little meaning. However, this is much more important Net return, which comes from the ratio of the Net rental income to the one used Equity capital is calculated. The increase in value of the property is initially not taken into account in this calculation.
Only in a second step can you add the expected increase in value. The bottom line is that the property should be sustainable and generate a profit even without an increase in value.
Here are some examples:
The additional purchase costs at a glance
When buying real estate in Hungary, the following additional costs apply in relation to the purchase price. In total you should be around 9 % in addition to the purchase price:
| position | Height | Explanation |
|---|---|---|
| Real estate transfer tax | 4% of the purchase price | Charged by the Hungarian state and determined by notice after purchase. |
| Costs of certification | 0,75 % + 35 € | Legal processing of the purchase contract including entry in the land register - in Hungary this is done by a lawyer, not a notary. |
| Fee for advice and support | 4.445% of the purchase price | Our fee for search, examination, negotiation and support until handover (3.5% plus 27% Hungarian VAT). |
| Total purchase costs | approximately 9.2% | Example: With a purchase price of €150,000, there are around €13,800 in additional costs. |
The net return is then calculated as follows: annual net rent divided by the total investment (purchase price + additional costs). Only this number provides an honest basis for your decision.
Modernization costs
Sometimes buying an inexpensive property that still needs to be renovated is more cost-effective than buying a ready-to-move-in property because there are no additional purchase costs on top of the modernization costs. The clear advantage here is the cost-effective hourly wages of Hungarian craftsmen. Risks lie in the quality (botched construction and rip-offs by foreigners). We have a network of trustworthy and capable craftsmen - but depending on the workload, there may be longer waiting times.
Expected return
For later sales in compliance with local tax laws: German legislators see one speculation period of at least 10 years between purchase and sale. In Hungary there are only 5 years. Only then is there any profit from increasing the value of real estate tax free.
The property will be in Hungary after a year again sold and the capital is invested in a new property, the profit must be made no income tax be paid.
More on the subject of returns in Budapest
Return on equity
She takes that into account Interest for financing as ongoing expenses and compares the remaining income with equity. When interest expenses are lower, as is currently the case, the return on equity appears high. However, it is always only a snapshot, as, for example, repayment or increase in value are not taken into account. If you invest in Budapest as an EU citizen, obtaining a loan in either Germany or Hungary is very difficult and expensive - we would advise against it at the moment.
