REAL ESTATE INVESTMENT: TAXATION

Objective

To equip employees in the real estate and investment departments with the knowledge and tools required to understand the taxation framework governing real estate investments in Hungary. The focus will be on improving their decision-making capacity regarding investment structures, tax liabilities, and compliance.

overview

1. Introduction to Real Estate Taxation in Hungary

Objective: To provide a comprehensive overview of the Hungarian tax framework and the significance of real estate taxation.

Why It’s Important: Understanding the basic tax laws and regulations is crucial before diving into the complexities of taxation specific to real estate. This builds the foundation for more advanced discussions.

Content:

  • Overview of Hungary’s tax system

  • Key terms and definitions (e.g., VAT, property tax, capital gains tax)

  • The legal framework governing real estate investments

2. Corporate Income Tax and Real Estate Investments

Objective: To explain how corporate income tax applies to real estate investments made by businesses.

Why It’s Important: This section is essential for understanding how business entities are taxed when engaging in real estate transactions and investments in Hungary.

Content:

  • Tax rates applicable to corporate investors

  • Taxable events: purchase, sale, rental income

  • Deductions and allowances related to real estate (e.g., depreciation, renovation expenses)

3. VAT (Value-Added Tax) in Real Estate Transactions

Objective: To delve into the application of VAT in real estate transactions, including sales, purchases, and leases.

Why It’s Important: VAT is a complex but significant element of real estate transactions, especially in cross-border deals involving foreign investors.

Content:

  • VAT rates for different types of properties

  • VAT exemptions in real estate

  • VAT in rental income vs. property sales

4. Local Property Taxes and Charges

Objective: To outline local tax obligations tied to owning or leasing property, including property taxes and land-use charges.

Why It’s Important: Property ownership incurs ongoing tax obligations that must be factored into investment decisions, impacting the long-term profitability of assets.

Content:

  • Property tax rates by municipality

  • Methods of assessment for property taxes

  • Penalties for non-compliance

5. Capital Gains Tax on Real Estate Sales

Objective: To explain the taxation of profits made from selling real estate assets in Hungary.

Why It’s Important: Investors must understand how profits from property sales are taxed and how to structure deals to minimize tax liabilities.

Content:

  • Calculating capital gains tax on property sales

  • Tax exemptions and reductions for long-term ownership

  • Cross-border capital gains tax implications for foreign investors

6. Double Taxation Treaties and International Investors

Objective: To explore Hungary’s double taxation treaties and their impact on international real estate investors.

Why It’s Important: Many companies have cross-border transactions, and understanding double taxation agreements helps avoid being taxed twice on the same income.

Content:

  • Overview of Hungary’s double taxation treaties

  • Applicability to foreign investors

  • Strategies to leverage these treaties in real estate deals

7. Compliance, Filing, and Reporting Requirements

Objective: To cover the administrative side of taxation, focusing on compliance, reporting, and filing requirements specific to real estate investments.

Why It’s Important: Proper documentation and timely filings are crucial for avoiding legal and financial penalties. This section ensures participants are aware of their obligations.

Content:

  • Deadlines for tax filings and payment

  • Documentation required for tax purposes

  • Common errors and how to avoid them.

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