Property Tax: When You Don’t Have to Pay It and Why Decisions Are Coming

Although it was expected that the Tax Administration would send decisions regarding property tax, many citizens were recently unpleasantly surprised by such a ‘greeting’ in their mailbox. Part of the decisions, as could be learned from the media and complaints from taxpayers, was incorrectly assessed, even for owners of the only property, but there are also many who did not timely send the Tax Administration the data that could exempt them from paying tax. Some apartment owners did not report that a family member lives in another property (for example, a son or daughter), and as a result, they received a tax decision. Namely, the Tax Administration uses data on utility fees and long-term lease agreements when assessing taxes, so if a person has two properties and has not reported any contract for the second property in which they do not live, they will receive a tax decision.

When is tax not paid?

Therefore, anyone who wants to avoid paying property tax for the year 2026 must fill out a form reporting to the Tax Administration the data and evidence essential for determining the tax, i.e., achieving exemptions.

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Although these provisions seem quite simple, there are still a whole range of uncertainties regarding property tax, so we have prepared a short guide based on the opinions provided by the Tax Administration over the past year.

• By when must property owners report changes affecting the tax?

Property owners are required to report changes that may affect their tax liability by March 31 of the year for which the tax is determined. This includes changes in the area of the property, changes in purpose, or providing evidence that allows for tax exemption if the tax authority does not have that data in its records. Therefore, if a family member lives in your second property and the Tax Administration has not received the lease agreement, it is necessary to report that fact. The same applies to properties that are not in usable condition.

• If the owner rents an apartment long-term to an employer who places workers in it, is property tax paid?

Yes. Although workers stay in such a property for a longer period, it is considered that the property is used for business purposes. Therefore, the owner cannot achieve tax exemption based on permanent residence. In general, if the apartment is rented long-term to a company, it is considered that the property is used for business purposes and therefore property tax is paid on it.

• Is property tax paid if the owner lives in the apartment for ten months and rents it to tourists for two months?

Not necessarily. If the owner can prove that the property serves for permanent residence, the fact that it is rented to tourists for a shorter period does not in itself mean that they lose the right to exemption. However, the burden of proof for permanent residence is on the owner. According to Article 88 of the General Tax Law, in tax proceedings, the burden of proof for facts that establish the tax lies with the tax authority, while the taxpayer bears the burden of proof for facts that reduce or eliminate the tax.

• Is property tax paid for tourist apartments that pay utility fees for business premises?

If a local government unit has determined a coefficient of utility fees for production or non-production business premises for such a property, that property is not considered a property in terms of the Local Taxes Act. In that case, the owner is not liable for property tax. Thus, the mere status of categorization of the apartments is not the only relevant factor, but also how the property is registered for utility fee purposes.

• If the apartment was empty until March and later rented for a year during the year, must property tax be paid?

Yes. Property tax is determined based on the status as of March 31, and changes that occur later during the year apply only from the next calendar year. Therefore, it is possible for the owner to pay both property tax and income tax from rent in the same year. For example, if the apartment was empty on March 31 and was only rented from May for 12 months, there is still a property tax obligation for that year because the conditions for exemption were not met on the relevant date nor was the property rented for at least ten months that year. Additionally, the landlord simultaneously pays income tax from rent, as it is a different type of tax obligation.

• To achieve tax exemption, must the lease last ten months without interruption?

No, it does not have to. It is essential that the property is rented for permanent residence for at least ten months in total during the year, even if it involves multiple lease agreements. It is possible to sum multiple agreements, provided they are concluded in accordance with the Lease of Apartments Act and reported to the competent Tax Administration. It is crucial that it is a genuine lease for residence, not a short-term tourist lease.

• If the owner uses part of the house for residence and part for tourist rental, is property tax paid for that part of the house?

No. If part of the property serves for the permanent residence of the host, property tax is not paid on that property in its entirety.

• Is property tax paid if the apartment or house is under renovation?

Renovation in itself does not mean exemption from tax. If the property has infrastructure and conditions for living, the fact that it is under renovation does not affect the obligation to pay tax.

• If ownership of the property has been transferred to a creditor as security for a debt, who pays the tax?

The tax is paid by the person who is the actual owner on March 31. If the creditor has not yet become the full owner, the debtor continues to pay the tax.

• Is it necessary to establish that the property served for permanent residence for at least ten months in the year for exemption from property tax based on permanent residence?

When proving that a particular property is used for permanent residence, all evidence material indicating the center of the taxpayer’s life interests is considered. In this sense, it is considered that the center of life interests of a taxpayer who has a close family (spouse and/or children) is where their family is located and where that family uses everything necessary for daily life (place of work, doctor, school, kindergarten, etc.), while for a taxpayer who is single, the center of life interests is determined by the place where they reside for a period longer than 183 days.

• Can the property be transferred to a spouse who does not own property in their name to avoid tax?

The fact that the residential property is the only property owned by the taxpayer is not in itself proof that it is a property for permanent residence exempt from property tax. The Tax Administration assesses the actual use of the property and the center of life interests of the owner.

• Can property tax be contested?

Tax decisions can be contested. If someone receives a decision for a property they claim not to own or believes the tax has been incorrectly determined, an appeal against the decision is allowed. The appeal must state the reasons for requesting a change or annulment of the decision and attach evidence.