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Taxation of Home Lease in 2021

Renting an apartment is easy, just as the fact of renting an apartment can easily come into the hands of the tax authorities. If you are a homeowner, be sure to consider this. Unless otherwise noted, tenants often threaten to file a tax filing with a tax authority.

Taxation of rental housing
Taxation of rental housing

It is easier for everyone if the housing is rented out cleanly and legally. Let’s see what the basics are during a rental. The tax rate is fair, the return is not complicated.

Of course, it is no surprise to anyone that income from renting housing, like other income, is taxable. In Hungary, however, there has been a decade-long tradition of “black” or “gray” leasing, which has ceased to exist but has not disappeared.

Recently, the National Tax and Customs Administration specifically drew the attention of landlords to the obligation to pay taxes. Probably the timing was not accidental, as most apartment leases are signed between August and September, as this is when life, schools and universities start again after the summer holidays. So let’s see the details.

What determines the method of taxation?

The method of taxation is basically determined by who owns the property. If the business is owned, the apartment must be rented from the business. Special rules must also be observed in the case of KATA taxation, as long-term leasing is prohibited in the case of KATA taxation. If you are an individual owner, the following rules must be followed.

Let’s see what you need to know about documenting rental income.

As a general rule, the leasing of residential real estate is exempt from VAT, therefore an individual who earns income exclusively from the leasing of residential real estate without VAT as an economic activity does not have to register with NAV (have a tax number). The landlord must document the income from renting the home, for which the bank statement may be suitable, and in the case of a cash payment, for example, the receipt.

Taxation of the rental, or what is the rate of tax payable on the income from the rental agreement?

There are two ways to determine the amount of income from your rental income. One option is the option of itemized cost accounting, where total revenue is reduced by verifiable costs (utility bills, renovation costs) and depreciation. The other option for taxing the rental of housing is to deduct a 10 percent cost share from the total income. This is actually possible because the legislature is aware that there are people who are unable or unwilling to confront bills. In any case, the legislator allows a fair share of 10% to be set against revenue.

What not to forget yet?

It is important to know that a tax advance must be paid quarterly and that income must be shown in the annual PIT return as income from self-employment. The overall tax rate is 15 percent.

And what about AirBnB?

It is important to emphasize that who is the so-called. AirBnB chooses taxation because it provides accommodation and is subject to completely different rules. AirBnBs are not subject to the classic rules for renting housing. Utilization as accommodation is another contractual as well as a tax scheme, which will be discussed in a separate article.

If you have any questions, you can talk about it HERE with our cooperating lawyer.

The information on renting an apartment for 2021 is available HERE on the website of the National Tax and Customs Administration.

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