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VAT Reduction on the Sale of Newly Built Apartments

VAT Reduction on the Sale of Newly Built Apartments

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The value added tax (VAT) on selling newly built properties will be reduced from 27% to 5% from 1 January 2021.

The demand in the real estate market accelerated so much that not only the prices of newly built homes, but also the prices of existing homes have risen. For months, construction industry players and home buyers have been waiting for the Hungarian Government’s decision to reduce the VAT to be paid on the construction of new homes. According to the bill, VAT on a new real estate is 5% if it does not exceed 150 square meters in the case of a multi-apartment residential property and 300 square meters in the case of single-family houses. Those who buy real estate participating in the Family Housing Subsidy Program (hereinafter referred to as: CSOK) can even have the 5 % VAT refunded, and new or used properties purchased with CSOK will be free of transfer tax as well, if the parties entered into the sales contract after 1 January 2021.

The 5% tax rate includes properties for which a building permit has been issued by the end of 2019, as well as those whose technical handover takes place after 1 January 2021. The latter is subject to 5% VAT even if the sales contract is concluded in 2020, so it matters when the real estate is handed over and when the payment is made.

By Eszter Kamocsay-Berta, Managing partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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