Question 1

What is this article about?

Accepted Answer

Purpose of the legal institution: A replacement purchase — referred to in the legislation in force as a “purchase substituting for an exchange” (cserét pótló vétel) — exempts private individuals who sell their home and buy a new one from the 4% property transfer duty payable on the full market value. • Differential duty base: When a more expensive home is purchased, only the positive difference between the market value of the property sold and that of the property acquired forms the duty base. When a lower-value home is purchased, the transaction is entirely exempt from duty. • Time limits: The relief may be claimed if the sale takes place within 5 years before the purchase of the home, or within 1 year after the purchase. • Scope limitation: The rule applies exclusively to properties registered in the real estate register as a dwelling house or flat, or to structures that have reached the roof-structure stage; building plots, holiday homes, resort properties and garages are excluded. • One-to-one principle: Against a single purchased home, the value of only one previously sold home may be taken into account; the sale prices of several properties cannot be combined. • Precedent-setting case law: According to court practice, a forced sale (official auction) may also give rise to the relief, and the exchange of separate dwellings held in undivided joint ownership may likewise be taken into account.

Question 2

What is the difference between the terms cserepótló vétel and cserét pótló vétel?

Accepted Answer

The two terms refer to the same legal institution; there is no difference in meaning between them. Cserepótló vétel is the expression established in everyday language, in the press and in property market practice, while cserét pótló vétel is the legal term used by the legislature in the Duties Act and on the official forms of the National Tax and Customs Administration. Both designations cover acquisition of property on a differential basis. Both usages are accepted in official proceedings, but on submissions and payment notices the term cserét pótló vétel (purchase substituting for an exchange) is used officially (Act XCIII of 1990, Section 21). On form B400 the declaration must be made with reference to the statutory section.

Question 3

What deadlines apply to the sale and the purchase for the relief?

Accepted Answer

Under the statute, a private individual may take into account, in the differential duty base, the market value of a home sold within five years before the purchase of the new home. If the purchase of the home takes place first, exactly one year from the conclusion of the contract is available for selling the existing residential property, which must be evidenced by the last day of the thirteenth month at the latest. In the case of a prior sale, the date of conclusion of the sale and purchase agreements is decisive. In the case of a later sale, missing the one-year period entails, as a general rule, the loss of the relief, and the full duty becomes payable.

Question 4

Is property acquisition duty payable if the newly purchased home is cheaper?

Accepted Answer

No; in this case the acquisition of property is entirely exempt from property transfer duty. If the market value of the newly acquired residential property is lower than that of the earlier home sold within five years or intended to be sold within one year, the calculated duty base is zero forints, so no payment obligation arises at all. The absence of duty payable does not exempt the buyer from the reporting obligation. Form B400 must be submitted together with the contract, on the basis of which the tax authority records the zero-forint payment obligation in a decision.

Question 5

Can the value of several homes sold be taken into account for a single, more expensive purchase?

Accepted Answer

No; the market values of several properties sold cannot be added together against a single purchase. Under the strict principle of the statute, only one residential property sold earlier or later may be paired with each home purchased. The acquirer may, however, freely select the most favourable sale transaction from among the homes sold within the five-year period. The requirement that the sale immediately preceding the purchase in time be used has been deleted from the statute. As a result, if someone sold several homes within the five-year window, the highest-value one may be set against the new acquisition in order to achieve the lowest tax burden.

Question 6

Can a replacement purchase be claimed for a building plot, garage or holiday home?

Accepted Answer

No; the statutory relief may only be applied to properties registered in the real estate register under the designation of dwelling house or flat, or to shell-completed residential buildings. In the case of the sale and purchase of a building plot, resort property, holiday home, industrial or commercial building, or a garage or storage unit registered under a separate land registry number, the replacement purchase relief is excluded. If, in the course of the sale transaction, the buyer also purchases a parking space or storage unit registered under a separate land registry number alongside the home, the replacement purchase relief applies only to the duty base of the home; the full 4% duty is assessed on the non-residential premises.

Question 7

What happens if the old property cannot be sold within one year after buying the new home?

Accepted Answer

If the private individual is unable to sell his existing home within one year after the purchase, NAV, in the absence of evidence, continues the suspended procedure. The authority imposes the four per cent property acquisition duty on the full market value of the newly acquired property, which must be paid increased by a late payment surcharge linked to the central bank base rate. The buyer can mitigate the burden if, seeing that the sale is being delayed, he withdraws the request for suspension before the deadline expires. This may reduce the surcharge burden, and a request for payment in instalments may be submitted to the authority in respect of the amount assessed.

Question 8

Can the relief be applied if the earlier home was sold at an official auction?

Accepted Answer

Yes; under a precedent-setting decision of the Curia, a home lost through an enforcement auction also gives rise to the duty relief for a purchase substituting for an exchange. The court held that the term “sale” in the Duties Act cannot be narrowed down exclusively to a classic sale and purchase agreement between the parties, and therefore the owner is entitled to the relief in the case of an auction as well. To claim the entitlement, the enforcement auction protocol and the final decision ordering the transfer of ownership must be submitted to the National Tax and Customs Administration. The five-year time limit laid down in the statute applies without change to the date of the auction sale as well.

Legal help for real estate contracts in Hungary.