In Hungary, profit from selling a Budapest apartment is subject to personal income tax at a flat 15% rate. The taxable gain reduces by 10% for each year you hold the property beyond year two, reaching zero after five full years of ownership. Allowable costs — purchase price, renovation invoices, agent fees — reduce the taxable base before the taper applies.
How Hungary taxes property sale profits
Hungary taxes the profit from selling residential property under the Personal Income Tax Act (Act CXVII of 1995, commonly called Szja törvény). The applicable rate is a flat 15%, applied to the net taxable income derived from the sale — not to the gross sale price. This distinction matters enormously when you are modelling after-tax proceeds on a Budapest apartment.
The taxable income is defined as the sale price minus the acquisition cost and minus any documented expenditure that increased the property’s value. Hungary does not operate a separate capital gains tax regime for real estate; instead, the gain falls into the category of “income from the transfer of property” within the personal income tax framework. The rules are the same whether you are selling a studio in the VIII. district or a larger flat in Buda’s II. district.
One important point: the tax base is calculated on the net gain after deductions, and then the five-year taper is applied to that net figure. Getting the order of operations right is essential when you sit down with a tax adviser or accountant before completing the sale.
The five-year taper rule explained
Hungary’s most seller-friendly provision is the time-based reduction of the taxable gain. The rule works as follows: in the year of purchase (year one) and the following year (year two), 100% of the net gain is taxable. From year three onward, the taxable portion decreases by 10 percentage points per year.
The counting method matters: the year in which you acquired the property is counted as Year 1, regardless of whether you bought it on 1 January or 31 December of that year. So a flat purchased in November 2021 and sold in January 2026 would already be in Year 6 — meaning zero tax liability on the gain. A flat purchased in January 2022 and sold in December 2026 would be in Year 5, with only 30% of the net gain taxable.
This taper is the single biggest lever available to sellers planning their exit. If you are close to a year boundary, the difference in tax owed can be substantial, and delaying completion by even a few weeks can move you into a lower bracket.
Crossing from Year 5 into Year 6 reduces the effective tax rate on your gain from 4.5% to zero. On a net gain of HUF 20 million, that is HUF 900,000 saved by waiting.
What costs you can deduct
The taxable gain is not simply sale price minus purchase price. Hungarian tax law allows several categories of deductible expenditure, and documenting these properly before you sell can meaningfully reduce your bill.
- Acquisition cost: The price you paid for the property, including the transfer duty (illeték) you paid at purchase.
- Documented renovation and improvement costs: Invoices for work that increased the property’s value — a new kitchen, bathroom refit, structural work, new windows. Routine maintenance and repairs do not qualify.
- Legal and notarial fees at purchase: The lawyer’s fee you paid when buying the property.
- Agent commission at sale: The agency fee paid to sell the property is deductible in the year of sale.
- Costs of title registration: Land registry fees paid at the time of purchase.
The key requirement is documentation. Hungarian tax authorities expect original invoices (számla) issued in the seller’s name or the property’s address. Receipts for cash payments without a proper invoice will not be accepted. If you renovated a flat in Józsefváros before renting it out and kept all contractor invoices, those costs reduce your taxable gain when you eventually sell.
How the calculation works in practice
Consider a realistic example set in Budapest’s VII. district. An owner purchased a 55 sqm apartment in 2022 for HUF 42 million. They spent HUF 5 million on documented renovation (new bathroom, kitchen, flooring). They sell in late 2026 for HUF 62 million, paying a 3% agency commission of HUF 1.86 million.
- Sale price: HUF 62,000,000
- Less acquisition cost: HUF 42,000,000
- Less renovation costs: HUF 5,000,000
- Less agency commission: HUF 1,860,000
- Net gain: HUF 13,140,000
- Year of sale: 2026 is Year 5 (purchased 2022 = Year 1), so 30% of net gain is taxable
- Taxable amount: HUF 13,140,000 × 30% = HUF 3,942,000
- Tax at 15%: HUF 591,300
If the same seller waited until 2027 (Year 6), the tax would be zero. If they had sold in 2024 (Year 3), the taxable portion would have been 90% of the net gain — HUF 11,826,000 — and the tax bill would have been HUF 1,773,900. The holding period makes a dramatic difference.
For buyers thinking about the investment case from the start, our guide to why investors choose Budapest covers how the tax structure fits into the overall return profile.
Rules for foreign (non-resident) sellers
Non-resident sellers — whether EU citizens, UK nationals post-Brexit, or buyers from outside Europe — are subject to the same 15% rate and the same five-year taper. Hungary does not impose a higher withholding rate on foreigners for residential property sales. The obligation to declare and pay the tax falls on the individual seller, not on the buyer or the notary.
However, double taxation treaty (DTT) provisions are relevant. Hungary has DTTs with most EU member states, the UK, the US, and many other countries. Under most of these treaties, income from the sale of immovable property is taxable in the country where the property is located — meaning Hungary has primary taxing rights. The seller’s home country may then offer a credit for Hungarian tax paid, but this depends on the specific treaty and the seller’s home jurisdiction. Foreign sellers should take advice in both Hungary and their country of residence before completing a sale.
There is no requirement for a non-resident seller to appoint a Hungarian tax representative solely for a property sale, but having a Hungarian tax identification number (adóazonosító jel) is necessary to file the declaration. If you do not already have one, it can be obtained from the National Tax and Customs Administration (NAV).
If you are buying as a foreign national and want to understand the full purchase and exit process, our safe property purchase legal service covers the ownership structure options that can also affect how a future sale is taxed.
Transfer duty and other transaction costs
Capital gains tax is not the only cost when selling a Budapest apartment. Sellers should also account for:
- Agency commission: Typically 3% of the sale price for a full-service agency. This is deductible from the gain as noted above. Some agencies charge higher rates — it is worth comparing. Our 3% commission service is among the lowest available in Budapest.
- Legal fees: A Hungarian lawyer must countersign the sale contract. Fees are typically 0.5%–1% of the sale price.
- Transfer duty (illeték): Transfer duty is paid by the buyer, not the seller, so it does not directly reduce sale proceeds. The standard rate is 4% of the property’s market value. First-time buyers and certain other categories receive reductions.
- Land registry fee: A fixed administrative fee paid at registration, currently a modest amount. Again, this is typically borne by the buyer.
From the seller’s perspective, the main out-of-pocket transaction costs are the agency commission and the legal fee. Both are deductible when calculating the taxable gain, which partially offsets their impact.
How to report and pay the tax
Property sale income must be declared in your annual Hungarian personal income tax return (személyi jövedelemadó bevallás, form 26SZJA for the 2026 tax year). The deadline is 20 May of the year following the sale. So if you sell in 2026, the declaration and payment are due by 20 May 2027.
The tax is self-assessed: you calculate the gain, apply the taper, and report the resulting taxable income. NAV does pre-fill tax returns for Hungarian residents using data from the land registry and other sources, but sellers should always verify the pre-filled figures rather than accepting them unchecked — the system does not automatically know your renovation costs or the exact agency fee paid.
Payment is made by bank transfer to NAV’s designated account. Late payment attracts interest at the central bank base rate plus a penalty surcharge, so meeting the May deadline is important. If the gain is large and you are unsure of the calculation, a Hungarian tax adviser (adótanácsadó) or accountant can prepare the declaration for a modest fee.
For those considering a structured exit — for example, selling after renovation to maximise the sale price — our renovate and resell service includes guidance on how renovation costs are documented for tax purposes.
Frequently asked questions
- Is there capital gains tax in Hungary if I sell my primary residence?
- Hungary does not have a blanket primary residence exemption the way some countries do. The same 15% rate and five-year taper apply regardless of whether the property was your main home or a rental investment. The only way to avoid tax on the gain is to hold for five full years (Year 6 onward) or to have no net gain after deducting allowable costs.
- What happens if I sell at a loss?
- If your documented acquisition and improvement costs exceed the sale price, there is no taxable gain and no tax to pay. However, Hungary does not allow you to offset a property sale loss against other income or carry it forward to future years. You simply declare zero income from the sale in your annual return.
- Does the five-year taper reset if I renovate the apartment?
- No. The taper is based on the date of acquisition of the property, not on the date of any subsequent renovation. Renovation costs reduce the taxable gain as a deductible expense, but they do not restart the five-year clock. The clock starts from the date the property was purchased and registered in your name.
- Do I owe Hungarian tax if I am a UK or US citizen selling a Budapest apartment?
- Yes. Hungary has primary taxing rights over gains from Hungarian real estate under most double taxation treaties, including those with the UK and the US. You will owe Hungarian personal income tax at 15% (subject to the taper). Your home country may give a credit for the Hungarian tax paid, but you should verify this with a tax adviser in your country of residence before completing the sale.
- Can I deduct the cost of furnishing the apartment?
- Generally, no. Furniture and moveable items are not considered improvements to the real property itself and are not deductible against the gain from selling the apartment. Only costs that are permanently attached to or structurally improve the property — such as fitted kitchens, bathroom installations, or new windows — qualify as deductible improvement costs under Hungarian tax law.
- What if the sale price in the contract is below the market value?
- NAV has the authority to substitute the market value of the property for the declared sale price if it considers the contract price unrealistically low. Hungarian tax law allows NAV to use an independent valuation. Understating the sale price to reduce the gain is therefore both risky and counterproductive — the tax authority can and does challenge suspicious transactions, particularly in high-demand districts of Budapest.
- Is the taper different for inherited or gifted property?
- For inherited property, the acquisition date is typically the date of death of the original owner, not the date probate was completed. For gifted property, the acquisition date is generally the date the gift was made. In both cases, the five-year taper applies from that acquisition date. The acquisition cost for an inherited property is its market value at the time of inheritance, as established in the probate process.
- Where can I see current Budapest apartments for sale?
- You can browse current listings on the Budapest property listings page, which is updated regularly with apartments across all price ranges and districts. If you are specifically looking for investment properties, the Budapest apartment sales section filters by property type.