Tax Benefits For Real Estate Investors In Hungary

Published on October 3, 2025 and written by Cyril Jarnias

Hungary, with its iconic capital Budapest, is increasingly establishing itself as a prime destination for international real estate investors. Beyond its rich cultural heritage and dynamic real estate market, the country offers a particularly advantageous tax framework that deserves detailed exploration. Let’s dive into the nuances of Hungarian taxation and discover why it could turn your real estate investment into a true financial success.

A Local Tax System That Makes Investors Dream

Hungary has implemented a particularly attractive tax system for real estate investors, whether local or foreign. The tax rate on rental income is set at only 15%, which is significantly lower than many European countries. This competitive rate allows property owners to retain a substantial portion of their rental income.

But that’s not all. Hungary also offers generous tax deduction possibilities. Investors can deduct almost all expenses related to their property, including maintenance costs, repairs, and even travel expenses to visit their property. This liberal approach to tax deductions significantly optimizes the net return on investment.

Another particularly interesting aspect of Hungarian taxation concerns capital gains tax on real estate. The capital gains tax rate is also set at 15%, but it gradually decreases each year. The icing on the cake? After five years of ownership, the capital gain realized from the sale of a property is completely tax-exempt. This provision encourages long-term investments and offers an excellent opportunity for capitalization.

International Agreements: Hungary, a Strategic Tax Hub

Hungary doesn’t just offer advantageous local taxation. It has also built an extensive network of double taxation treaties with numerous countries, further enhancing its appeal to international investors.

These agreements prevent real estate income from being taxed both in Hungary and in the investor’s country of residence. For French residents, for example, the Franco-Hungarian agreement stipulates that rental income and real estate capital gains realized in Hungary are taxable only in Hungary, thus benefiting from the advantageous rates mentioned earlier.

This situation is particularly interesting for investors residing in countries with high tax pressure. By investing in Hungary, they can benefit from reduced taxation while remaining compliant with international regulations.

Furthermore, as Hungary is a member of the European Union, European investors benefit from additional legal security and increased ease for cross-border financial transactions.

Property and Residence Taxes: The Icing on the Fiscal Cake

Hungary’s tax attractiveness doesn’t stop at income and capital gains taxes. The country also stands out for its policy on property and residence taxes.

In Hungary, there is no national property tax per se. Municipalities have the option to impose a tax on real estate, but it remains relatively moderate compared to other European countries. In Budapest, for example, this tax is calculated based on the property’s area rather than its value, which tends to limit its amount, especially for high-end properties.

As for the residence tax, it simply doesn’t exist in Hungary. This absence represents significant savings for property owners, whether they occupy their property or rent it out.

This light tax policy regarding local taxes helps reduce property holding costs, thereby improving the overall investment profitability.

Hungary vs. The Rest of the World: A Competitive Tax Haven

To fully understand Hungary’s competitive advantage in real estate taxation, it’s interesting to compare it to other popular real estate investment destinations.

France: With tax rates on rental income that can reach 45% and social contributions of 17.2%, French taxation is significantly heavier. Additionally, property tax and residence tax can represent substantial amounts.

United Kingdom: The tax rate on rental income can go up to 45%, and there is a capital gains tax on real estate. Non-residents are also subject to a 2% surcharge when purchasing a property.

Spain: Non-residents are taxed at a flat rate of 24% on their rental income, without the possibility of deducting expenses. Property tax can be high in certain regions.

Portugal: Although the country offers tax benefits to non-habitual residents, rental income is taxed at progressive rates that can reach 48%.

In comparison, Hungary stands out for its simple, transparent, and advantageous taxation. The flat rate of 15%, extensive deduction possibilities, capital gains exemption after 5 years, and absence of residence tax make Hungary a highly attractive tax destination for real estate investors.

Conclusion: Hungary, a Smart Choice to Optimize Your Real Estate Investment

Hungary offers a particularly favorable tax framework for real estate investors, combining low tax rates, generous deductions, and quick capital gains exemption. This attractive tax policy, combined with a dynamic real estate market and still affordable prices, makes Hungary a prime destination for savvy investors.

However, as with any international investment, it’s crucial to research thoroughly and surround yourself with competent professionals to navigate the subtleties of local and international taxation. With a good strategy and a deep understanding of the Hungarian tax framework, your real estate investment in Hungary could well become your best financial asset.

Don’t hesitate to explore the opportunities offered by this growing market. Hungary could well be the key to your success in international real estate investment.