What's the simplified way?
There are two general methods of taxation in Hungary for property related revenue. One is the itemized, the other is the simplified accounting method. With the simplified tax method you are allowed to deduct only 10% of all your expenses. This does not reduce the tax base as much as you potentially could, leaving you with more tax to pay in the end. Doing the simplified method is less hassle for the accountant, but the property owner will end up with a huge tax bill to pay.
Isn't there a smarter way to do this?
Doing the itemized way will leave you with more net income. For example, most people are not aware of the fact that the utility bill under the name of the property owner is a valid expense. This expense alone could reduce the payable tax significantly. Depreciation of the book value of the property can be a major expense to reduce the tax base -2% of the purchase price annually.
So what do you recommend?
You get more value for your money in the itemized methods it will minimize the tax base as much as possible using all relevant invoices in related to visiting the investment property (flight tickets, hotel accommodation etc.). Itemized method requires monthly processing of invoices and record keeping, but most clients end up with no or very little payable tax.
Tower's in-house chartered accountants saved more than 330 thousand euros in unpaid or reclaimed tax money for property owners for the previous financial year.
