Understanding Real Estate Taxation in Hungary for French Nationals

Published on July 6, 2026 and written by Cyril Jarnias

Investing in Real Estate in Hungary is attracting more and more French people, whether for a pied-à-terre in Budapest, an apartment to rent, or a second home by Lake Balaton. But behind the still attractive prices per square meter lies a very specific tax environment, different from the French system on several key points: no recurring national property tax, degressive capital gains taxation over time, and sometimes delicate coordination with French tax via the Franco-Hungarian tax treaty.

General Framework: Who Taxes What Between France and Hungary?

Before diving into the details of local taxes or capital gains, it is essential to establish the framework: what is taxed in Hungary, what must be declared in France, and the role of the Franco-Hungarian tax treaty.

Tax Residence and Allocation of Taxing Rights

Hungary applies a flat income tax of 15% for individuals. Hungarian tax residents are taxed on their worldwide income; non-residents are taxed only on Hungarian-source income (for example, rents or capital gains from a property located in Hungary).

Direct consequence for a French person who owns a property in Hungary: the real estate income and capital gains are taxable in Hungary as Hungarian-source income, but they must also be declared in France since they are part of the overall worldwide income of the tax household. It is precisely to avoid full double taxation that the tax treaty between France and Hungary plays a role.

France-Hungary Tax Treaty: Principle of Eliminating Double Taxation

The tax treaty between France and Hungary on income and wealth taxes sets the rules for allocating taxing rights. For real estate, it follows the classic logic of OECD conventions: the state where the property is located has the primary taxing power.

For a French resident, the practical mechanism is as follows:

– Rental income or capital gains from Hungarian sources must be declared on the supplemental form 2047, then transferred to form 2042, and, for real estate income, if applicable, on form 2044 (actual regime) or in the “rental income” section for the micro-landlord regime.

– The treaty provides, depending on the case, either an exemption with inclusion for the effective rate, or a tax credit equal to the foreign tax (within the limit of the corresponding French tax).

– In practice, the tax paid in Hungary offsets, in whole or in part, the taxation in France, but the amounts must still be declared in all cases.

The key takeaway for a French property owner in Hungary is therefore simple: Hungary taxes real estate located on its territory, France requires the declaration of this income, and the treaty prevents the same flow from being fully taxed twice.

Taxation at Acquisition: Transfer Tax, VAT, and Fees

One of the first shocks for a French investor accustomed to high transfer taxes in France is the relative moderation of acquisition taxes in Hungary.

Hungarian Transfer Tax (illeték): 4%, with Caps

In Hungary, any purchase of real estate (apartment, house, building plot, commercial premises) triggers payment of a transfer tax borne by the buyer. The seller has no such obligation at the time of sale.

The principle is simple: the tax is calculated on the market value, generally taken as the price stated in the deed, unless it is clearly undervalued. The rate is progressive but with a cap:

Concretely, for the vast majority of individual buyers, the effective rate is 4% on the entire price, because the 2% bracket only applies above approximately €2.5 million in value.

Foreigners, including French citizens, are not subject to any specific surcharge: the rules, rates, and exemptions are identical for Hungarians and non-residents, regardless of nationality.

Reductions and Exemptions at Purchase

Hungary has implemented a range of favorable measures, some of which may benefit a French buyer, provided they meet the age, value, and sometimes family status criteria.

Among the significant reliefs:

Even if some of these schemes are more designed for Hungarian households (CSOK, young first-time buyers), a French person meeting the legal criteria can benefit from them, the law does not discriminate based on nationality for these advantages.

VAT on New Real Estate

Indirect taxation is another major point of divergence between Hungary and France. The standard Hungarian VAT rate is 27%, one of the highest in Europe. For new real estate, the regime is nuanced:

The structure is therefore as follows:

For a French investor, the challenge is to clearly distinguish:

– the transfer tax (4% or less, due on the VAT-exclusive value),

– and VAT on the sale price of a new property, included in the price paid to the developer.

In comparison, in France, a purchase of an old property incurs transfer taxes close to 7–8% whereas in Hungary, it is 4% standard, which significantly reduces the entry cost, even if VAT on new properties can be heavy.

Total Transaction Costs

Beyond the tax, a buyer must account for various ancillary fees: attorney fees (mandatory in Hungary to secure the transaction), possible agency commission, administrative fees, translations, etc. In practice, total acquisition costs (excluding any renovation work) often represent between 5% and 8% of the price, with the heaviest component remaining the 4% transfer tax.

Property Ownership: Local Taxes and No Recurring National Tax

For French people accustomed to property tax (taxe foncière), sometimes the residence tax on second homes (taxe d’habitation), and possibly the real estate wealth tax (IFI), Hungary offers a very different landscape.

No Annual National Property Tax

Hungary has neither a national property tax nor a real estate wealth tax. There is no centralized annual levy on the mere possession of a property, nor on a household’s overall real estate assets. No Hungarian IFI is added to the French IFI for a resident of France.

However, municipalities have significant fiscal power through local taxes on buildings and land, set at their discretion within national limits.

Local Taxes: Building Tax and Land Tax

The main local taxes are:

– the tax on buildings (building tax, “építményadó”),

– the tax on land (land tax, “telekadó”).

For buildings, the national annual caps are as follows:

The “adjusted value” corresponds to a fraction (often 50%) of the market value, which tempers the 3.6% rate. Municipalities are free to set a lower rate, and many do.

For land, the principle is similar:

In practice, many municipalities do not apply or apply little these taxes to purely residential housing, and focus on commercial properties or certain vacant land in urban areas.

For a standard apartment in Budapest, the annual local tax bill is often between nearly zero and a few tens of thousands of forints, i.e., on the order of a few tens to a few hundred euros. Thus, in most cases, it is far below a typical French property tax of 1–1.5% of rental value.

Special Cases: Tourist Areas of Balaton and Hévíz

A notable exception concerns certain tourist areas, especially around Lake Balaton and Lake Hévíz. In these resorts, municipalities can institute a specific annual tax per square meter, sometimes expressed in euros.

The observed magnitude is as follows:

For an 80 m² second home by Lake Balaton, this represents an annual tax roughly between €160 and €240, which remains modest compared to the recurring tax charges borne by an equivalent property in France.

Interaction with French Wealth Taxation

A French tax resident remains exposed to the IFI on their worldwide real estate assets exceeding €1.3 million in net value. Hungarian properties therefore enter the IFI tax base, in addition to Hungarian local tax. The absence of a wealth tax in Hungary does not protect against the IFI, which remains a French tax.

Therefore, it is important to clearly distinguish:

– the absence of annual wealth tax in Hungary,

– the possible application of the IFI in France if the threshold is exceeded.

Renting a Property in Hungary: Local Taxation and Declaration in France

Renting out a property in Hungary, whether year-round or as seasonal rental, generates taxable income both in Hungary and, for a French resident, in France.

Taxation of Rental Income in Hungary: Flat Rate of 15%

In Hungary, rent received by an individual is subject to income tax at the flat rate of 15%. This is the same rate as for salaries, interest, or capital gains on securities.

The regime provides two methods for calculating the taxable base:

– the actual method, where expenses actually incurred and documented (current charges, management fees, certain works, etc.) are deducted from the gross rent;

– a simplified regime, where a flat-rate deduction of 10% of the gross rent is applied, without needing to detail expenses.

After applying one of these methods, the net base is taxed at 15%.

Local Taxes and Possible Tourist Tax

For long-term rentals, the only relevant local taxes are, if applicable, the building tax or land tax mentioned above.

For tourist rentals (short-term furnished rentals), a local tourist tax may apply. Municipalities may set it either:

– as a percentage of the nightly price (up to 4%),

– or as a fixed amount per night and per person (up to HUF 300).

Again, this is a local tax, separate from the 15% tax on the owner’s income.

Declaration in France: Foreign-Source Rental Income

For a French tax resident, rent received in Hungary must be declared in France, even if the Hungarian tax has already been paid and even if the treaty gives Hungary the primary taxing right.

The declaration process is carried out in several steps:

The Franco-Hungarian treaty provides, for this income, a mechanism for eliminating double taxation that takes the form of an exemption with inclusion for the calculation of the effective rate or a tax credit. In both cases, the Hungarian income influences the average tax rate of the French household, even if the tax actually due on this income is offset by the tax paid in Hungary.

Another element not to forget is social contributions in France: foreign rental income may be subject to social levies, with a specific regime for persons affiliated with a social security system of another European Economic Area country or Switzerland. In that case, the CSG and CRDS may be exempt, but a solidarity contribution of 7.5% remains.

Real Estate Capital Gains in Hungary: The Big Difference with France

Capital gains taxation on real estate is one of the most attractive aspects of the Hungarian system for a medium- or long-term investor.

Calculation of Capital Gain: Net Base Then Deduction Based on Holding Period

At the time of resale, it is the seller who bears the capital gains tax on real estate in Hungary. The capital gain is not calculated on the gross price, but on a net gain after taking into account several items:

– initial acquisition price,

– transfer tax paid at purchase,

– expenses that increased the property’s value (work, renovations, improvements, with invoices),

– costs related to the sale (agency commission, attorney fees, certain documented expenses).

This mechanism is fairly similar to that used in France based on gross price / costs / work, but with specific caps and modalities for each country. Once this net capital gain is determined, Hungary applies a particularly interesting rule: taxation decreases based on the holding period.

The scale for an individual is as follows:

Full exemption therefore occurs after the fifth full year of ownership. For a French investor accustomed to the French system (where full exemption is only achieved after 22 years for income tax and 30 years for social contributions), this is a major advantage: an exit horizon of only 5 years is enough to eliminate all Hungarian capital gains tax, regardless of the extent of the price increase.

Comparison with France: 15% vs Overall Flat Levy

In France, real estate capital gains (excluding primary residence) are subject to income tax at a rate of 19% plus social contributions at 17.2%, for a theoretical total of 36.2%, with a progressive allowance system over time: exemption from income tax after 22 years and exemption from social contributions after 30 years.

– The tax treaty recognizes Hungary’s primary right to tax the capital gain from a property located on its territory.

– The French resident must declare this capital gain in France, via Form 2047 and then the main tax return.

– A mechanism for eliminating double taxation applies, in the form of a tax credit or exemption with inclusion for the rate, so that the tax paid in Hungary offsets the tax theoretically due in France on the same flow.

When the capital gain is fully exempt in Hungary (ownership of 5 years or more), the question is more delicate: France retains the right to tax the capital gain according to its own domestic law, the treaty leaving it this power when the other state no longer exercises its own. Guidance from a tax specialist is then strongly recommended to assess the overall cost of the sale.

Transfer, Inheritance, and Gifts: Hungarian Regime and Comparison with France

Beyond purchase and resale, many French people are interested in transferring their Hungarian assets, whether by inheritance or gift.

Inheritance Tax in Hungary: A System with a Face Rate of 18%, but Strong Exemptions

Hungary does not have an “inheritance tax” in the sense of a tax paid by the estate, but a tax due individually by each heir on their share. The standard rate is 18%, with a reduced rate of 9% for residential properties (houses, apartments, vacation homes).

However, the most important parameter for a French person is the extent of exemptions for close relatives:

In practice, an apartment in Budapest bequeathed by a parent to a child is therefore exempt from Hungarian tax, regardless of its value. This point contrasts sharply with France, where, despite allowances per child, the rate can reach 45% in the direct line above a certain threshold.

For more distant heirs (siblings, collateral relatives, friends), rates of 9% or 18% apply to the net inherited value, from the first forint, with no allowance comparable to the French system, but with specific exemptions, for example for certain low-value movable property.

Gift Tax: Same Logic as Inheritance

Real estate gifts largely follow the same rules as inheritances:

For a French person looking to optimize the transfer of their Hungarian assets, this framework offers interesting possibilities: it is possible to gift a Hungarian property to one’s children or spouse during one’s lifetime without incurring gift tax in Hungary, whereas the same operation in France could be heavily taxed, depending on the value and frequency of gifts.

However, it must be kept in mind that for a French tax resident, these transfers must also be assessed under French law, which remains competent in civil and tax matters for a large part of the estate, and the tax treaty does not necessarily cover all gratuitous transfer taxes. A “bilateral” analysis is therefore essential.

Synthetic Comparison France – Hungary on Real Estate Taxation

To better understand the strengths and limitations of the Hungarian system for a French person, it is useful to summarize the main differences.

This table highlights:

For a French resident, these advantages must, however, be weighed against the persistence of French obligations: full declaration of income and assets, possible application of the IFI, and treatment of capital gains under French law if Hungary no longer exercises its taxing right (after five years, for example).

Practical Coordination with the Tax Treaty for a French Person Investing in Hungary

Beyond the general rules, a French person needs to know how the tax treaty concretely applies in their life as a Hungarian property owner.

Case of a French Resident in France Renting an Apartment in Budapest

On the Hungarian side:

– rent is taxed at 15%, after deducting actual expenses or the flat 10%;

– local tax, if any, is paid to the relevant municipality, generally in two annual installments.

On the French side:

– gross and net rents are recorded on Form 2047;

– the rental result is declared as rental income (micro-landlord or actual regime);

– France calculates a theoretical tax on these rents but grants a tax credit corresponding to the tax paid in Hungary, or applies an exemption with effect on the effective rate.

Case of a French Person Selling Their Hungarian Property at a Gain

If the resale occurs before five years, a capital gain is calculated on the Hungarian basis and taxed at 15% on the taxable portion, according to the degressive scale. The French resident must:

– declare this capital gain in Hungary and pay the tax due;

– report it in France on their tax return, mentioning the foreign tax paid.

The treaty then allows neutralizing all or part of the theoretical French tax, via a tax credit or other mechanism to avoid double taxation.

Case of an Inheritance or Gift of a Hungarian Property Within a French Family

In a scenario where a French parent bequeaths a Hungarian apartment to their children:

– On the Hungarian side, the transfer in direct line is exempt from inheritance tax; no inheritance tax is therefore due on this property in Budapest.

– On the French side, the inheritance is treated according to domestic law, with the application of the French scale on the entire worldwide estate, including the Hungarian property, subject to French-specific allowances.

The tax treaty does not eliminate French tax on this transfer; it simply ensures that Hungary collects nothing in this specific case (domestic legality) and that, if applicable, one does not pay twice on the same flow. For gifts, the logic is similar: Hungarian exemption in direct line, but application of French gift tax law for a resident of France.

What to Remember Before Investing: Advantages, Limits, and Vigilance

For a French person, Hungary offers an overall advantageous real estate tax environment:

– lower acquisition costs,

– no recurring national property tax,

– capital gains taxation that disappears after five years,

– zero-rate transfers in direct line and between spouses under Hungarian law.

But these advantages must be viewed in light of the French situation:

In practice, Hungary can be an interesting tool for geographic and tax diversification of a French real estate portfolio, provided the full bilateral implications are anticipated: local tax at entry, during ownership, and at exit, but also impacts on the household’s overall taxation in France.

– how is the flow (rent, capital gain, gift, inheritance) treated in Hungary?

– how will this same flow be viewed by the French administration, and how will the treaty arbitrate between the two?

It is only under this condition that you can fully benefit from Hungary’s strengths, without being caught off guard by a tax adjustment or unanticipated taxation in France.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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