You have a fairly new mortgage, that is, you have had it for a few months, and you know that tax return season is approaching. Are you wondering whether it is possible to deduct mortgage interest and how to do it? Or did you not know about this option until recently, and are you asking whether you can still deduct the interest and what the conditions are? You will find a detailed breakdown and much more after reading our article.
Who can deduct interest from the tax base?
Practically everyone who is paying off a mortgage. An important rule is that you must not be a flat-rate taxpayer (paušální daň). If you have the flat-rate regime set up and, as a self-employed person (OSVČ), pay everything into one account (social security, health insurance and tax), you cannot claim this deduction. But if, as a self-employed person or an employee, you file a tax return, you can deduct the interest.
How does the deduction work in practice?
At the start of every new year, your bank sends you a “confirmation of interest paid” (potvrzení o zaplacených úrocích). In this confirmation, the bank tells you exactly how much you paid in mortgage interest in the previous year. You can then take this amount and deduct it from the tax base.
What is the tax base?
Here you need to distinguish whether you are self-employed or an employee. The tax base is formed differently for each. You need to know the tax base correctly so that you arrive at the right result in the end. We will use individual examples to explain the difference in the tax base between a self-employed person and an employee.
Example 1
If you are self-employed and earned, say, 500,000 CZK (about 23,000 USD) in a year, you still need to deduct costs from the profit. Let’s take the example of the flat-rate expenses, that is, costs set at a flat 60% of your profit. The costs are therefore 300,000 CZK (about 14,000 USD). That gives a profit of 200,000 CZK (about 9,200 USD) for the calendar year. So 200,000 CZK (about 9,200 USD) is your tax base. From that, you then deduct what you paid on the mortgage. Let’s say that was 50,000 CZK (about 2,300 USD). Your tax base is then further reduced by that 50,000 CZK (about 2,300 USD). From the tax base, you can also deduct, for example, some donations, payments into supplementary pension insurance, and so on.
Example 2
You are an employee and had a gross income of, say, 400,000 CZK (about 18,000 USD). The HR department gives you a confirmation of income from your employment. This confirmation no longer shows the gross wage and the amount you paid for social security and health insurance. Your employer gives you a confirmation only with the amount you earned net. For our purposes, let’s say this amount is 300,000 CZK (about 14,000 USD), and that is your assessment base. You can then deduct the interest and the other amounts from it, as described in the previous paragraph.
You can also deduct interest from building savings (stavební spoření), or more precisely from the loan that your building society gave you as part of your building savings scheme. And how does a building savings loan work?
Deducting mortgage interest retroactively
Unfortunately, this option is not available in the Czech Republic. So if you have already missed the chance to deduct the interest for the previous calendar year in your tax return, you will have to wait until next year. Do not delay deducting interest on your mortgage or building savings. In the first few years, the amounts you pay in interest tend to be the highest. By delaying, you would be giving up a nice tax refund.
Just to be safe, we are also including a link to the Financial Administration’s forms, which will come in handy when preparing your tax return.
USD amounts are approximate, converted at the Czech National Bank rate of 21.80 CZK per USD on 2 October 2026.
