The Real Estate Acquisition Tax (abbreviated as the Real Estate Acquisition Tax) has earned the nickname “unfair tax”. Buyers had to pay four per cent of the price of the property they purchased to the state until a proposal to abolish it was approved in 2020. For example, for an apartment worth CZK 3 million, this amounted to CZK 120 000. In recent years, the state has collected around CZK 13 billion a year from this tax.
Since when is property tax not payable?
The proposal to abolish the real estate acquisition tax was signed by the President of the Czech Republic, Miloš Zeman, on Friday 18 September 2020. The real estate acquisition tax was effectively abolished retroactively from 31 March 2020. This tax is no longer payable by purchasers who had until the end of March 2020 to file their returns and whose deadline was subsequently postponed until the end of August of that year due to the coronavirus pandemic. Therefore, buyers who complete the land registry entry in December 2019 or later no longer pay the property tax.
Lower limits for mortgage interest deduction
The first proposal approved by the government envisaged the abolition of the possibility to claim deductions for interest paid on newly concluded mortgages as a non-taxable part of the tax base after 2021. However, the MPs’ amendment retained this possibility, but reduced the limits of deductions from the original CZK 300,000 to CZK 150,000 (note: for new mortgages taken out from 1 January 2022). For mortgages taken out before 1 January 2022, the limit of CZK 300,000 will continue to apply, including later refinancing.