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Click here for our property in BudapestBackground InformationCapital: Budapest (2 million inhabitants). It is divided into two large parts, the hilly Buda on the right bank of the Danube and the mostly flat Pest on the left bank, connected by 9 bridges. Budapest is divided into 23 districts. Population: 10 million. The Hungarian language is spoken by 93% of the population, which is a special language originating most likely from the Finno-Ugric tribe of languages. Two thirds of the population are Roman Catholic. Foreign Community: Hungary is seen by 31 million visitors per year, and there is a small but growing ex-pat community taking advantage of the good climate and improving market as well as an increasing number of holiday home owners. Area: 93,030km2. Geography: Hungary is a landlocked country but in a strategic position astride main land routes between Western Europe and the Balkan Peninsula as well as between Ukraine and the Mediterranean basin. The land is mostly flat (lowest point 78m) with hills and low mountains (highest point: 1014 m), mostly in the north/north-eastern, the south-western part of the country, and on the northern coast of Lake Balaton, which is the largest lake in Hungary at 598 square kilometres. Other lakes are Velencei-tó (26 sq. km) and Fertő tó (75 sq. km). Major rivers are the Danube, Tisza, Rába and Zagyva (179 km). Hungary is divided into several large regions: Alföld (Great Plain), Kisalföld (Small Plain), Nyugat-Magyarországi peremvidék or Alpokalja (Western Hungary or Lower Alps), Dunántúli-dombság (Transdanubia hills), Dunántúli-középhegység (Transdanubia mountain range) and Északi-középhegység (Northern mountain range). Climate: Hungary enjoys a typical continental temperate climate with Mediterranean and Atlantic influences: cloudy and, humid winters, and warm summers. Average temperatures are -2C (28F) in January and 23C (73F) in July. Political Stability: Hungary has a stable republican parliamentary democracy with 4-year election periods. Finance for your Budapest propertyCurrency: Hungarian Forint (HUF). Expected to adopt the Euro in 2010. Capital Gains Tax (CGT): You will have to pay capital gains tax of 20% of the profit from the rent and the sale of your Budapest property. This tax can be deduced from your tax liability according to the double taxation agreement between Hungary and other EU countries.. PropertyBudapest Property Market: While, like many countries, the first big boom in property prices has passed, Hungarian properties are still undervalued compared to other European countries. Average prices in Budapest are a fifth of the prices in London, a quarter of Dublin or Paris, a third of neighbouring Vienna and about half that of Madrid or Barcelona. Areas: Budapest has a predominant position in the Hungarian economy, generating 34% of the national GDP and attracts more than 60% of the total foreign investment. While the commercial property supply is already guiding the market, the residential market is unlikely to in the near future. A well-chosen property will be a high yielding and secure investment for a long time. Cost of Budapest property: Typical price for a 1 bedroom apartment in Budapest is around 100,000 EUR while a 2 bedroom apartment is around 140,000 EUR. Small villas and penthouse apartments can be bought from approximately 270,000 EUR and townhouses and luxury villas are priced at 350,000 and above. Local Mortgages for property in Budapest: Mortgages up to 70% of the purchase price are available from Hungarian banks, over between 1 and 20 year terms. Purchase Procedure: Buying Budapest property is quite easy. Nowadays, foreign nationals can also buy real estate without limitations (not counting agricultural lands, which do have some restrictions). It is recommended you seek a good solicitor, who will take you through the whole process for 1% of the sales price. After you have chosen the property and your solicitor has checked the owner's status at the Land Registry, you have to pay a 10-20% deposit and sign the purchase agreement which ensures the owner cannot sell it to anyone else. Your solicitor will then file the contract of sale to the Land Registry and your name will appear as a "side note" on the ownership certificate, as the next owner. This is enough to prevent the previous owner from selling it or putting any mortgage on it. Once the total purchase price is paid you can take full possession; however, you are not yet fully registered. You can legally sell your Budapest property once your registration on the side note is confirmed. You have a choice of buying as a private individual or founding a company. Buying Budapest property as a private person: You must apply for a permit from the Administrative Office of Budapest, who will answer within 30 days. If the answer is positive (99% of the time it is), you can proceed and receive full registration. If the answer is negative (this happens quite rarely), you still can choose between setting up a company or filing a suit against the Administrative Office of Budapest, which you have a fairly good chance of winning. Setting up a company: If you intend to purchase several Budapest properties and may be doing other business in Hungary, founding a limited liability company is recommended. It's a relatively easy procedure. Setting up a limited liability company (Kft.) will cost around 180,000 HUF (about 500 GBP), including solicitor's fees. The procedure takes 3-5 days, and a sum of 3,000,000 HUF (about 8,000 GBP) must be deposited in a Hungarian bank for at least 2 days. The monthly cost of accounting is approx 20,000 HUF (50 GBP) even if there is absolutely no activity in the company, because quarterly tax sheets and other reports must be regularly filed. A certified accountant must be appointed. The owners of the company may be private persons and legal entities as well. They can be domestic or foreign nationals too. It is possible to have only one owner, however, in this case an auditor must also be paid annually. Corporate tax is 16%. The solicitor will need personal details, a Hungarian address (usually that of the purchased property), a name for the company, and areas of activity specified (property sales, management, services). After the Deed of foundation is concluded, the specimens of signature need to be signed in front of a public notary. Meanwhile a bank account needs to be opened for the company and the registered capital has to be deposited. With the certificate from the bank, the solicitor can submit the Founding Document to the Court. As soon as the company receives a tax number, a registration needs to be handed in separately to the tax authorities, the local municipality, the chamber of commerce (not compulsory), as well as the social security system. All the files must go to an accountant who will take care of everything and warn the owner of legal changes and payment deadlines. A company registered in Hungary can immediately become the owner of property without having to apply for a permit. In case you decide to sell your Budapest property, closing a company is not advisable, as it is a long and complicated process. Solicitors and accountants recommend selling the company at a nominal value (with the property). If the main activity of the company is buying and selling property and sells the property within 2 years following the purchase, transfer duty is only 2%. Otherwise the transfer duty is 2% following only the first HUF 4 million (10,000 GBP) of the purchase price; above HUF 4 million it is 6%. Before January 1st 2001, founding a partnership (Bt.) was fairly common among foreigners, as it costed less to establish and maintain; however, new accounting laws make it just as expensive to maintain it as a Kft. The primary difference between a partnership (Bt.) and a limited liability company (Kft.) is that the full owner of a Bt. is fully liable if the company goes bankrupt, where in a Kft. the liability is limited until the amount of the registered capital. A Bt. requires at least two members. A Bt. does not require 3,000,000 HUF registered capital. You can decide which form of incorporation you will use. Fees for Budapest property: There is a lawyer's fee, which is around 1% of the purchase price and there are Stamp Duty Charges. Stamp Duty charges vary according to the property price (usually between 0 and 5% fo the purchase price). |
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