Last updated: 16 October 2026
How is property in Budapest taxed if you live in the UK?
If you’re UK resident and own property in Budapest or elsewhere in Hungary, you may pay tax in both countries. Hungary taxes rental income from Hungarian property and may charge a local building tax set by the district council. The UK taxes your worldwide rental income and gains, but the UK–Hungary double tax treaty lets you claim credit in the UK for Hungarian tax paid on the same income. You report the income on the foreign pages (SA106) of your Self Assessment return.
Taxes in Hungary
- Personal income tax: 15% flat rate on rental income
- Local building tax: charged by some Budapest districts, based on floor area or value
- Tourist tax: for short-term lets, usually collected from guests
- Transfer tax on purchase: usually 4% of value
Rules and rates can change, so check with a Hungarian adviser before letting.
UK tax on the rental income
| Item | Treatment |
| Rental profit | Taxable at your UK rates |
| Hungarian income tax | Foreign tax credit relief, up to the UK tax on that income |
| Local building tax | Usually a deductible expense, not a credit |
| Mortgage interest | 20% basic rate tax reduction for residential property |
| Losses | Can only be set against other overseas rental profits |
Property income tax rates rise by 2 percentage points from April 2027.
Example
Anna, a UK higher rate taxpayer, lets a flat in Budapest’s District VII for £9,000 a year. Expenses, including local building tax, are £2,000, leaving £7,000 profit. Hungary taxes the rent at 15%, around £1,350 if no deductions are allowed. UK tax at 40% on £7,000 is £2,800. She claims £1,350 credit and pays £1,450 in the UK.
Selling the property
A gain on sale may be taxable in Hungary and is taxable in the UK at 18% or 24%. Credit is given for Hungarian tax on the same gain. UK residents must report the gain in their Self Assessment return.
Short-term lets
Holiday lets in Budapest face extra registration, and Budapest has restricted short-term letting in some districts. Furnished holiday letting rules in the UK were abolished from April 2025.
Common mistakes
- Not declaring foreign rent in the UK
- Claiming more foreign tax credit than the UK tax due
- Using the wrong exchange rates
- Ignoring Hungarian filing obligations
Records to keep
Keep tenancy agreements, Hungarian tax returns, payment records and exchange rate workings.
Buying through a company
Some investors buy Budapest property through a Hungarian company. Profits are then subject to Hungarian corporate tax (9%) and dividends paid to a UK resident are taxed in the UK, with credit for any Hungarian withholding tax. This can suit larger portfolios but adds accounting costs in Hungary, so compare both routes before buying.
Frequently asked questions
Do I need a Hungarian tax number?
Yes, to report and pay Hungarian tax.
Is UK inheritance tax due on the flat?
It can be, depending on your residence status.
Can I claim travel to Budapest?
Only for genuine property business trips.
Do I need an accountant in both countries?
Often, yes.
Exchange rates
Convert income and expenses using HMRC’s published exchange rates or the actual rate, consistently.
Related: overseas rentals, offshore investments and IHT and foreign inheritances.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with overseas property tax advice. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
