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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

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com