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Government details home purchase subsidies in decrees

The Hungarian government published decrees detailing conditions for the recently launched home purchase subsidies for families with children (CSOK) in the official gazette Magyar Közlöny on Wednesday, according to a report published yesterday by Hungarian news agency MTI.

The conditions are outlined in two decrees: one for the purchase of new homes and the other for resale homes. The decree for new homes grants HUF 600,000 to families with a single child for purchases. Families with two children are eligible for HUF 2.6 million and families with three children for HUF 10 million. There is no limit on the value of the home purchased.

The subsidies are available to spouses, young married couples or couples in civil partnerships with children. Couples that commit to having children are also eligible for the subsidies, as long as they are married and one is under the age of 40 at the time of application.

Commitments to have children are limited to three for couples with no children, two for couples with one child and one for couples with two children. Couples have four years to fulfil their commitment to have one child, eight to have two children and ten to have three.

The commitments may be met with adopted children or biological children of one of the applicants that are a member of the household by virtue of a court or other official resolution. Children from previous relationships of the applicants are also eligible.

The subsidies may be used for the purchase of homes which were completed on or after July 1, 2008 or for which a building permit was issued on or after that date.

Homes purchased with the subsidies must be at least 40 sqm in the case of families with a single child, 50 sqm for families with two children and 60 sqm for families with three children. The thresholds are higher - 70 sqm for a single child, 80 sqm for two and 90 sqm for three - in the case of single-family detached homes.

Families that are awarded the subsidies must live in the homes they purchase for a period of ten years, with certain exceptions.

The subsidies are limited to homes built by companies for sale to natural persons, however, the decree allows Hungarians who build their own homes to reclaim VAT on the investment up to HUF 5 mln. Applications for the VAT refund may be made on invoices issued after January 1, 2015 on a single occasion until the end of 2019. The refunds are available for flats up to 150 sqm and detached single-family homes up to 300 sqm.

Additionally, the decree establishes an interest subsidy on home loans up to HUF 10 mln for families with three or more children, ensuring an interest rate of 3%.

The decree detailing the conditions for the home purchase subsidies for resale homes grants HUF 600,000 to families with a single child, HUF 1,430,000 to families with two children and HUF 2,200,000 to families with three children. Families with four or more children are eligible for HUF 2,750,000. The subsidies may also be used to add on to existing homes.

The price of homes that may be purchased with the subsidies is capped at HUF 35 mln. The price may also be no more than 20% over the market value of the home as established by the lender.

The conditions for eligibility for couples that commit to having children are similar to those detailed in the decree on new home purchases subsidies, however, only promises to have up to two children are applicable.

Applicants who are awarded the subsidies and fail to meet the four-year or eight-year deadline for having one or two children, respectively, must repay the grant with interest.

Children in the decree are defined as foetuses after the 24th week, biological or adopted children living at home under the age of 20, or under the age of 25 for those at college or university.

Applicants must show they have never committed a criminal offence, they must not have tax arrears and must show they are up to date on their social insurance contributions.

Applicants who want to use the subsidies to buy another home may own no more than 50% of the dwelling and must live there with their child or children. Additionally, the home must be mortgaged to the state for a period of ten years.

Applicants who are awarded the subsidies and later have more children than planned may apply for a grant of HUF 400,000 per child as long as the money is used to repay their home loan.