One of the biggest changes to property sales income tax is that the taxable period is
cut from 15 years to five. This means that proceeds from the sale of a house will be
fully taxable in the first year, while the seller will have to pay tax on 90 per cent of the
revenues in the second, 60 per cent in the third year, 30 per cent in the fourth year, and
will have no tax to pay in the fifth and following years.
It matters whether you have to pay tax on a flat you sell after a few years at a gain of a
few million Forints.
The change is beneficial for people who bought their flats more than five years ago but
less than 15 years ago, and who do not wish to reinvest all the capital in a new property
"People who bought a flat in or before 2003 will do well out of this," says Akos Muranyi,
an analyst at the estate agency Duna House, "because they can sell it tax-free, and no
longer need to wait the full 15 years."
Proceeds from the sale of a property remain taxable only if the income exceeds the
purchase cost of the property and the transaction costs, according to Gergely Beres
Molnar, an auditor and tax consultant.
If somebody bought a flat in 2004 for 9m forints and then spent 1.8m forints, selling it in
before 2008 for 13m forints, then he or she had to pay 25 per cent tax on the income of
2.2m forints, in which case tha tax payable wa 550,000 forints. If the same flat is sold in
2008, only 30 per cent of the returns (660,000 Forints) is taxable, for a total payment of
165,000 forints.
Even though this brings the tax burden down to a third of its previous level, there is
another side of the coin.
Property acquisition discounts came to an end in January, 2008. At the same time, for a
transitional period, people who spend income earned before 1 January 2008 on a new
residential property, within 60 months of the original sale, will continue to benefit from
it. Such people would be well advised to sell their property this year, whether this is a
flat, a house, a building lot, a garage, a shop, or a holiday home.
The income from the sale must be declared, but the tax need not be paid if the person
buys a flat with the proceeds before the tax filing deadline, which falls on 20 May.
Otherwise, the tax must be paid, but the proceeds can be reclaimed if another flat or
house is bought within 60 months.
Source: HVG
cut from 15 years to five. This means that proceeds from the sale of a house will be
fully taxable in the first year, while the seller will have to pay tax on 90 per cent of the
revenues in the second, 60 per cent in the third year, 30 per cent in the fourth year, and
will have no tax to pay in the fifth and following years.
It matters whether you have to pay tax on a flat you sell after a few years at a gain of a
few million Forints.
The change is beneficial for people who bought their flats more than five years ago but
less than 15 years ago, and who do not wish to reinvest all the capital in a new property
"People who bought a flat in or before 2003 will do well out of this," says Akos Muranyi,
an analyst at the estate agency Duna House, "because they can sell it tax-free, and no
longer need to wait the full 15 years."
Proceeds from the sale of a property remain taxable only if the income exceeds the
purchase cost of the property and the transaction costs, according to Gergely Beres
Molnar, an auditor and tax consultant.
If somebody bought a flat in 2004 for 9m forints and then spent 1.8m forints, selling it in
before 2008 for 13m forints, then he or she had to pay 25 per cent tax on the income of
2.2m forints, in which case tha tax payable wa 550,000 forints. If the same flat is sold in
2008, only 30 per cent of the returns (660,000 Forints) is taxable, for a total payment of
165,000 forints.
Even though this brings the tax burden down to a third of its previous level, there is
another side of the coin.
Property acquisition discounts came to an end in January, 2008. At the same time, for a
transitional period, people who spend income earned before 1 January 2008 on a new
residential property, within 60 months of the original sale, will continue to benefit from
it. Such people would be well advised to sell their property this year, whether this is a
flat, a house, a building lot, a garage, a shop, or a holiday home.
The income from the sale must be declared, but the tax need not be paid if the person
buys a flat with the proceeds before the tax filing deadline, which falls on 20 May.
Otherwise, the tax must be paid, but the proceeds can be reclaimed if another flat or
house is bought within 60 months.
Source: HVG
| Income tax and VAT changes Selling a residential property in 2008 From January 2008, rules on personal income tax and value added tax have changed with respect to real estate sales. |
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| real estate, residential property, income tax, VAT, value added tax, change, 2008 |
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| Disclaimer: the article serves merely information purposes. Due to its extent, it is neither an all round information nor shall it be qualified as legal advice. |
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Housing policy, bank financing - taxation law changes
Effective of 2008, several amendments were initiated in the taxation law changes that
potentially have an effect on the housing market. According to these:
Effective of 2008, several amendments were initiated in the taxation law changes that
potentially have an effect on the housing market. According to these:
- Upon purchase of residential property, the home acquisition allowance (that is,
the tax allowance for the amount invested into a new home, out of the proceeds
from a sold home) would be eliminated.
- Income from the sale of a home would become taxable in the case of its sale
within five years (previously this term was 15 years).
- Property tax is coming: land and buildings may be taxed by local municipalities
from 2009, on the basis of computed values. The extent of tax would be not
more than 0.5% in the case of residential homes and plots, with a maximum of
1.5 per cent for other properties. The actual introduction of the tax, its size, any
exemptions and allowances shall be determined by the local municipalities, in
their own competence.
- On residential and holiday homes with a computed value exceeding 100 million
Forints, companies will start to pay tax (for the portion above 100 million Forints),
that is, the 'luxury tax' already applicable to private individuals would be extended.
- A plot built-in within four years would be exempt from duties only if the built-in
portion is at least half of the extent prescribed locally.
- Private individuals shall also pay VAT, if they sell, but only if they sell for a fourth
time within two calendar years a plot, or a new property, that is less than two
years old.
- The duty offices shall provide information on property transaction free of charge
for courts, local governments and other official bodies. To credit institutions and
companies active in property trade the same information shall be made
available against a fee.