Property Transfer Tax Relief in Hungary: Replacement Purchase

When you buy and sell residential property in Hungary, you may be entitled to a significant transfer tax (illeték) saving through what is known as the replacement purchase relief (cserepótló vétel kedvezmény). Understanding the rules — and the deadlines — can save you a meaningful sum.

How the relief works

Under Hungarian law, when a person sells one residential property and buys another, transfer tax is calculated only on the difference between the market value of the property purchased and the property sold — rather than on the full purchase price. This can substantially reduce the tax base.

The key deadlines

The timing rules depend on which transaction comes first:

If you sell before you buy:
Under the rules in force since 1 January 2018, if you sold your residential property within the three years preceding your new purchase, the tax authority will take that earlier sale into account when calculating the tax base. This extended the previous one-year window significantly, giving sellers more flexibility.

If you buy before you sell:
The relief still applies, but the window is shorter — the sale of your previous property must be completed within one year of signing the purchase agreement for the new property.

You must claim the relief — it is not automatic

The replacement purchase relief does not apply automatically. You must request it, either by notifying the lawyer preparing the purchase agreement or by flagging it to the tax authority at the time of filing. Your lawyer will ask whether the relief may apply — make sure you raise it if there is any chance you qualify.

Practical checklist

• Did you sell a residential property in the past three years? → Relief may apply to your new purchase.
• Are you buying first, selling later? → You have one year from signing to complete the sale.
• Have you told your lawyer you want to claim the relief? → Do not assume they will raise it unprompted.

Hungarian property transfer tax rules can be complex, and the savings from getting them right can be substantial. If you are buying or selling residential property in Hungary and want to make sure you are not overpaying on tax, contact our firm — we are happy to advise you.