Becoming a resident of a European country is easier than it seems. All you need to do is invest in an apartment or house in Hungary. Here are all the relevant details.
There’s a stereotype that obtaining a residence permit in a Western country is a complex and time-consuming process. Hungary disproves this notion, as it has been a member of the European Union since 2004. A Hungarian residence permit offers numerous advantages.
First and foremost, it provides access to the European banking system, as well as the ability to receive medical services and ensure your children receive an education that meets European standards. Meanwhile, the cost of living in Hungary is relatively low. According to available data, living in the capital, Budapest, costs about €3,000 a month. In comparison, living for a month in Austria would require around €4,500. The average utility costs typically do not exceed €80.
A Hungarian residence permit is also an excellent way to optimize taxes. The fixed income tax rate is 15%, while the corporate tax rate is only 9%.
Most importantly, Hungary offers what is known as a guest residence permit for 10 years, which can be renewed. This is all thanks to the updated “Golden Visa” program launched this year. It allows individuals to obtain a residence permit through investment. There are no challenging requirements for those wishing to acquire this document, and there are also no restrictions. For instance, with this residence permit, you can work freely in Hungary, travel throughout the Schengen Zone, or conduct business in Europe.
Hungary’s Golden Visa: Details
The new program for obtaining a Hungarian residence permit started in July 2024. To participate, you can invest in a real estate fund accredited by the Hungarian National Bank (there will be only a few funds allowed to participate in the program, and they will undergo strict screening and selection) or make a donation to a cultural or educational institution in Hungary. Another popular option is to purchase residential property worth at least €500,000. The option for obtaining a residence permit through real estate purchases will become available starting January 1, 2025. The International Wealth team will gladly assist you with applying for a Hungarian Golden Visa.
The investment-based residence permit program in Hungary is convenient in many respects. It does not impose any requirements regarding the applicant’s wealth, education level, or language proficiency. The document is issued for an initial period of ten years, and you can subsequently extend it for another ten years. Additionally, there is no minimum stay requirement in the country under the “Golden Visa.”
However, even if you do not live in Hungary permanently, you have the right to work in the country, both as an employee and in your own business. The Hungarian Golden Visa allows not only the investor but also their spouse and minor children to enter and reside in Hungary. Speaking of children, they can attend Hungarian public schools for free.
You’ve decided to purchase property in Hungary: What type of property qualifies for the Golden Visa?
- It must be residential property, either an apartment or a house. You cannot obtain a residence permit by purchasing commercial property.
- You can buy an apartment in either a new development or the secondary market. The key is that the property must be ready; properties still under construction do not qualify for the program.
- The apartment must have a minimum area of 120 square meters.
- The purchased property can be rented out and generate income. However, you cannot sell it for five years; otherwise, your residence permit will be revoked. After this period, selling the apartment or house is tax-free.
- You can choose property in any area of Hungary.
Where is the best place to buy an apartment in Hungary?
The most promising property to acquire is undoubtedly an apartment in Budapest. The capital of Hungary is divided by the Danube River into two parts – the hilly area of Buda and the flat area of Pest. These two areas consist of 23 neighborhoods, simply numbered with Roman numerals.
The most popular area in Buda is the II district. It attracts tourists as it is located near the historical center of the city. Additionally, foreigners love the I district, which has many palaces and museums. If you prefer modern buildings, the III district is a good choice, as it is undergoing significant redevelopment.
In Pest, apartments are often purchased in the small V district. This area is home to many attractions, such as St. Stephen’s Basilica, the largest church in Budapest.
If you consider properties outside the capital, the popular tourist region known as Southern Alföld, bordering Serbia, is worth looking into. Properties near Lake Balaton, which features a resort town with numerous beaches, and near Lake Hévíz, known for its healing properties, are also good options for rental investments.
What can you buy for €500,000 in Budapest?
You can find a good apartment with modern renovations in central districts for €500,000, including options with three bedrooms and an area of over 120-130 square meters (which is precisely what is required under the Golden Visa program). If you dream of a larger apartment with a beautiful panoramic view, prices for such properties typically start at €600,000.
What are the advantages of buying an apartment in Budapest?
By European standards, real estate in Budapest is considered affordable. The average price of an apartment here is 30% to 40% lower than that of a similar property, for example, in Barcelona.
Moreover, property values are rising. Over the past ten years, apartments in Hungary have almost doubled in price. Consequently, rental prices are also increasing. The average yield is between 4% and 7% annually based on the property value.
What expenses should you be prepared for? How much does it cost to complete a property purchase in Hungary?
In general, you should be prepared for expenses amounting to around 10% of the property’s value. In addition to the property at the minimum price of €500,000, you will need to pay for:
- Legal and notary services (usually around 5% of the transaction value).
- Obtaining permission from the municipality to purchase property. The permission for purchase with ownership registration costs at least €280.
- Paying taxes. If you buy an apartment on the secondary market, you will need to pay a transfer tax of about 4% (within 90 days of the purchase). If you choose new housing, you will need to pay VAT, which ranges from 5% to 27% of the property price. However, this is often already included in the price of the apartment or house.
Steps to obtain a residence permit in Hungary through investment
- Preliminary collection of documents and submission of an application to the Hungarian consulate in your country.
- Obtaining an investor invitation visa, which will be valid for six months. This visa allows the applicant to travel to Hungary and stay there for up to 90 days.
- Making the investment (in our case, purchasing property). You can choose a property to buy in advance, which is highly preferable, or select it once you are in the country. Upon arriving in Hungary, remember that you must complete the transaction within three months of your entry.
- Based on the investment made, you can then apply for a 10-year residence permit.
To gather the initial document package, consult professionals.
