Mária Lakatos

Taxation in General: Hungarian Tax System

Real estate sales tax liability

If an individual derives income from the sale of real estate, that income is taxable. The tax rate is 15 % and is taxed as non-consolidated income.

Various costs can be deducted from this income, so after deducting the expenses from the total income (purchase price), we get the tax base.

Deductible expenses:

the amount spent on acquisition, i.e. the old purchase price,
expenditure incurred in connection with the acquisition (for example, fee paid),
the cost of a value-added investment in the property for sale (e.g. modernization of heating, increase of comfort, installation of an attic, construction of a fence. Maintenance and maintenance costs such as painting or replacement of coverings are not eligible unless these costs amount to 5 % of the value of the property),
expenditure incurred in connection with the sale of the property (such as advertising fees).

Of course, only costs that can be evidenced by an invoice can be taken into account, so these invoices need to be well kept. But if the taxpayer has previously accounted for any expense against revenue from another activity (such as renting), it cannot be re-accounted for when the property is sold.

The income from flat sales can be further reduced. The reduction is based on the time elapsed between purchase and sale. In the year of acquisition and the following year, 100 % of income is taxed. From the second year after acquisition, the tax is payable for the 90 % of income, 60 % from the third year, 30 % from the fourth year, and 0 % from the fifth year. That is, from the fifth year after acquisition, the properties can be sold tax-free. This particular depreciation is called obsolescence (avultatás).

Taxation in General: Hungarian Tax System

Tartalomjegyzék

Kiadó: Akadémiai Kiadó

Online megjelenés éve: 2022

ISBN: 978 963 664 137 5

Taxation is a scheme for the state to provide revenue. The so collected money could then cover the public spending of the government. These are the so-called allocative and redistributive functions of the state budget. Although, taxation theory discusses the various tax types and analyses the various taxation tools very extensively, there is no absolute answer to the question, when and what type of taxation system would be optimal. Thus this introductory book on taxation deals with the three basic types of taxes - the income tax, the VAT and the corporation tax - in a very pragmatic way. There are legal texts and cases from both the international and also from the relevant Hungarian practice.

This book is recommended not only for students of economics but also for law students and practitioners beside anyone who is interested in the basic regulations of taxation.

Hivatkozás: https://mersz.hu/lakatos-taxation-in-general-hungarian-tax-system//

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