Financial law questions on the transfer and utilisation of real estate

• Author: Éva Erdos, Zoltán Varga
• Position: Associate Professor, PhD, Head of the Financial Law Department, Institute of Public Law, Faculty of Law, University of Miskolc/Associate Professor, PhD, Financial Law Department, Institute of Public Law, Faculty of Law, University of Miskolc
• Pages: 51-67

LESIJ NO. XXVI, VOL. 1/2019

FINANCIAL LAW QUESTIONS ON THE TRANSFER AND UTILISATION OF

REAL ESTATE

Éva ERDS*

Zoltán VARGA**

Abstract

In our article we analyze the transfer and utilization of real estate from a financial point of view.

After the introduction we clarify the main elements of the theme. We overview the basic concepts of the

following acts: personal income tax, act on duties, and on local taxes. Then we focus on the tax aspects

of the transfer of real estate, especially on the definition of real esta te and property rights in the Act on

Persona l Income Tax and to the deter mination of the income and profit from rea l estate transfer from

the perspective o f persona l income tax, on the basis of per sonal income tax a nd on the ta x rate. We

examine the ta x reliefs a nd exemptions for rea l estate tr ansfers, historica lly, and under the effective

law. In the second part of the article we deal with some issues of the real estate transfer from the aspect

of duties, with the duty to be pa id in case of the free transfer of the pr operty and its a ntecedents.

Secondly with the regulations of duties related to pr operties in case of onerous transfer of estates. The

third main pa rt is the tax la w of short and long-term housing (Airbnb), the ta xation of apa rtment and

house rentals a nd finally taxation of short time apartment and holiday resor t rentals.

Keywords: taxation, real estate, a partment, market value, short and long time housing (airbnb).

1. Introduction

We can approach the examinatio n of

financial legislation on real estate taxation

from several sides, and there are many

possibilities for regulation in financial law.

The subject has b een of eternal significance

since the introduction of the Personal

Income Tax Act of 1988, as we sell, rent,

buy, lease and etc., land, property,

apartments, and to these, different taxation

and tax payment rules are to be applied.

We can examine the definition of t he

property, provisions on the transfer of

immovable property, the provisions of

income tax related to the sale of rea l estate,

* Associate Professor, PhD, Head of the Financial Law Department, Institute of Public Law, Faculty of Law,

University of Miskolc (e-mail: jogerdos@uni-miskolc.hu).

** Associate Professor, PhD, Financial Law Department, Institute of Public Law, Faculty of Law, University of

Miskolc (e-mail: civdrvz@uni-miskolc.hu).

the tax pro visions related to the immovable

property acquisition and the tax regulations

related to real estate utilization. When

renting a property, it is important whether

the activity is ca rried out as a business

activity or not, and new oppor tunities have

also emerged in housi ng utilization, suc h as

the RBNB - short-term apartment renting,

which is currently at its peak. This is due to

the digital revolution, the spread of on -line

programs at light speed, and the

development of tourism.

The property can be a land, but also an

apartment, a holiday home, a farm, or a

garage, which may also have different

regulations. It is also important that an

52 Lex ET Scientia International Journal

LESIJ NO. XXVI, VOL. 1/2019

individual or a legal entity is the seller or the

user. T hus, it can be seen that the financial

issues of taxation of real estate provide

numerous opportunities for investigating

and exploring problems.

Property regulation is always at the

center of interest nowadays - when it comes

to the recovery and revival of the real estate

market - it is very timely to review the key

points of the regulations.

In this paper we summarize the tax and

levy rules related to the transfer of property.

2. Cla rification of concept s: Rea l

estate, apartment, property rights,

definition of the land

In the financial legal provisions, we

can find the definition of property in several

places, on one hand, Act CXVII of 1995 on

Personal Income Tax1. (Hereinafter referred

to as "Szja tv.") And on the other hand in the

Act O n Duties (Act XCIII of 1990)2.

(Hereinafter: Itv.)

The definition of the Personal Income

Tax Act.:

'Real property' shall mean any parcel

of land and all other constituent parts of the

land, excluding all standing (not harvested)

crops o r produce sold without changing

owners of the real property (e.g. standing

trees).

‘Arable land’3 shall mean the landed

areas used for agricultural and forestry

purposes as de fined in the Act on

1 Act on Personal Income Tax Chapter III. Section 3, Concepts and interpretative provisions, point 29.

2 Act XCIII. of 1990.

3 Act on Personal Income Tax Chapter III. Section 3, Concepts and interpretative provisions, point 51.

4 Act CXXII of 2013 on Transactions in Agricultural and Forestry Land.

5 Act CXXII of 2013 on Transactions in Agricultural and Forestry Land Paragraph 5 point 25.

6Act CXXII of 2013 on Transactions in Agricultural and Forestry Land Paragraph 5 point 3.

7 Act on Personal Income Tax, Chapter III., Concepts and Interpretative provisions, point 31.

8 Act on Personal Income Tax, Chapter III., Concepts and Interpretative provisions, point 73

9 Act on Personal Income Tax, Chapter III., Concepts and Interpretative provisions, point 73

Transactions in Agricultural and Forestry

Land4.

‘Farmstead’5 shall mean a parcel of

land located outside the limits of the

settlement, not exceeding o ne hectare in

size, consisting - apart fro m the land - of a

residential and farm building or buildings for

crop and animal production, and the related

processing a nd stor age o f agricultural

products, or any parce l of land registered in

the real estate register as a farmstead;

‘Estate’6 shall mean all lands of the

right-holder, whether under the title of

ownership, usufruct or any other legitimate

form of use;

‘Rights in immovables’7 shall mean

incorporeal rights in property, such as

dominant tenement, leasehold, usufruct, use,

easement and lease rights.

‘Residential suite’8 shall mean a

constructed structure registered, or in the

process of being registered in the real estate

register as a detached house or a r esidential

suite, furthermore, a structure under

construction shown a s a detached house in

the building permit if the walls and the roof

structure are completed, furthermore, any

rural house standing o n a parcel shown as a

homestead in the real estate register.

‘Residential lot’9 shall mean a building

plot defined as such in the Act on the

Formation and Protection of the B uilt

Environment, i f the land is zoned for

residential building in the respective

structural plan and/or in the local zoning

ordinance, also the parcel of land that is