Co-investing in Budapest real estate: how legal protection works
Become a partner for as little as €75,000 – with secure ownership, ongoing rental income and professional management.
Partial ownership can be secured using the following models:
Corporation
Private Co-Ownership Agreement
Model A:
Private Co-Ownership Agreement
with land register shares
Private Co-Ownership is a simple way to invest jointly in a property. Each investor is registered directly in the Hungarian land register. The cooperation is governed by a contract – ideal for small groups of up to four people who want a clear ownership structure and low running costs.
The most important facts at a glance
Structure
- Each investor is entered in the land register on a pro rata basis
- The cooperation is governed by a civil law partnership agreement
- An administrator (e.g. co-investor or service provider) takes over the operational management
Advantages
- Maximum legal security (ownership in the land register)
- No accounting obligation, low running costs
- Income is considered private investment income (often tax-free under DBA)
Disadvantages
- Decisions usually only possible unanimously
- Sale only with land register amendment (notary)
- No automatic limitation of liability
Tax treatment
- 15 % income tax on 90 % of rental income (flat-rate operating cost regulation)
- No corporation tax
- After 5 years holding period: sales profit tax-free (in HU & DE)
costs
- Contract preparation 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 direct line in Hungary
Model B:
Kft structure
(Hungarian limited liability company)
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 a clear allocation of roles, simple share transferability and high scalability – albeit with higher administrative costs and somewhat more complex tax treatment.
The most important facts at a glance
Structure
- Foundation of a Kft (Hungarian limited liability company)
- Property belongs to Kft, investors hold shares
- Accounting, balance sheet, taxes by tax consultant
Advantages
- Professional structure, well suited for groups (from 5 people)
- Sale of shares possible without land register change
- Clear representation rules in the articles of association
Disadvantages
- Higher costs (foundation, bookkeeping, accounting)
- Dividend distribution taxable in DE
- 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
costs
- Foundation costs approx. 2,000 €
- Ongoing bookkeeping: approx. 80 €/month
- Annual balance: approx. 250 €/year
- Account management: approx. 15-20 €/month
Exit
- Sale of company shares (contractually regulated)
- No notary or land register amendment necessary
Comparison table: Kft vs. private model
| Criterion | Civil law contract | Kft model |
|---|---|---|
| Ownership | Directly in the land register | Ownership with the Kft |
| Tax on rents | 15 % on 90 % of the income | 10 % KIVA + 15 % withholding tax |
| Tax on sale | Tax-free after 5 years | Tax-free after 5 years |
| Administrative costs | Low | High (accounting, balance sheet, etc.) |
| Exit | Land register sale with notary | Share purchase without notary possible |
| Flexibility | Limited with many people | High (clearly regulated, flexible) |
| Group size | up to 4 persons recommended | from 5 persons recommended |
Example project (with both models)
Apartment: approx. 110 m², 8th district, 3 studios at € 600 rent (tenants pay service charges)
| Position | Private model | Kft model |
| Purchase price | 360.000 € | 360.000 € |
| Incidental acquisition costs | 17.100 € | 18.300 € |
| Total investment | 377.100 € | 378.300 € |
| Gross rent p.a. | 21.600 € | 21.600 € |
| Administrative costs | 4.536 € | 4.536 € |
| Tax + accounting | 2.916 € | 5.814 € |
| Net income p.a. | approx. € 14,148 | approx. € 11,250 |
Would you like to become a partner in an attractive old apartment in Budapest with a manageable amount of money? Let us check together which model suits you best.
We can then clarify any other questions that are important to you during the appointment.