The personal income tax aspect of the surrender of a real estate leasing transaction

In case a real estate leasing transaction falls through and due to the increment of the real estate, the lessee claims back money when clearing accounts, the lessee had to pay personal income tax and social security contribution after the realized revenue.

The Leasing Association with the assistance of Deloitte submitted an amendment proposal concerning the issue. Our amendment proposal was accepted by the Ministry of Finance and appropriated by the Parliament.

By this regulation, the amount of the leasing contract as subject of specific taxation is charged with 25% taxation liability payable by the lessee if the transaction falls through.

At the same time, however, if a leasing transaction concerning a flat or a house surrenders five years after signing the contract, the lessee will not have a tax payment obligation as regards the amount of money claimed back (revenue). Moreover, concerning the revenues realized during a transaction surrendered within 2-5 years, a proportional declining possibility should be taken into consideration. 90% of the obtained amount of money can be considered revenue in the second year depending, of course, on when the wealth acquisition took place in connection with this.. This proportion lowers to 60% in the third year, 30% in the fourth and 0% in the fifth.