Renting out an apartment involves more than finding a tenant and collecting the rent. Repairs need to be paid for, tenants need to be checked, expenses need to be documented and insurance needs to provide the cover the owner expects. Here are four practical areas to get right.
1. Keep Money Available for Repairs
Painting, replacing flooring and repairing or replacing appliances can require significant spending at short notice.
Keeping part of the rental income in a separate maintenance reserve means money is already available when something needs repairing or replacing.
As Alex Markus of City-Lets explains: “Rent received is not all profit. Some of that money needs to remain available for the property because sooner or later something will need repairing or replacing.”
2. Take Time to Choose the Tenant
An empty apartment means lost rent, but accepting a tenant too quickly can create larger costs later.
Check income and references and, where the information is available, previous rental history. Previous late payments or repeatedly leaving tenancies early are also relevant when assessing an applicant.
“A landlord can become so focused on avoiding another empty month that they accept a tenant too quickly. A short vacancy can cost less than choosing the wrong tenant.”
The aim is to find a tenant who can pay the rent consistently and intends to stay for the agreed period.
3. Keep Receipts and Records From the Beginning
Hungarian landlords have two main ways to calculate taxable income from residential rental income.
Under the 10% expense method, 90% of the revenue is treated as income and additional individual expenses cannot be deducted. Under itemised expense accounting, documented expenses connected with renting the property can be deducted from revenue. NAV specifically identifies costs including renovation and utility expenses in its guidance.
If you use itemised accounting, keep the relevant invoices and receipts when the expense occurs rather than trying to reconstruct them at the end of the year.
Not every property-related purchase automatically qualifies as a deductible expense, so the tax treatment of individual costs should be checked when necessary.
4. Check What Your Insurance Covers
Do not assume that simply having home insurance means every loss will be covered.
The Hungarian National Bank advises owners to check the insured amounts and policy conditions carefully. It also warns that underinsurance can result in only part of a loss being reimbursed.
This is particularly worth checking after renovating, modernising or adding valuable equipment to the property. MABISZ specifically recommends reviewing older policies to prevent underinsurance.
For a Budapest condominium apartment, check what the building’s policy covers and then compare it with your own policy rather than assuming the two provide identical protection.
“With insurance, the policy matters more than the product name. Check what is insured, for how much and what you would actually be able to claim for.”
Keep money available for repairs, check tenants carefully, retain the records needed for your chosen tax method and know what your insurance covers before you need to make a claim.