What taxes do you have to pay in connection with property, and which taxes are now a thing of the past? Find out the most important facts about taxes and property.
Taxes related to acquiring property that are now a thing of the past
Taxes and property is quite a broad topic. Today, in cooperation with the estate agency Keller Williams, we look at a few basic facts you should not miss. Did you know that most of the taxes we associate with property have been abolished entirely?
We can start the list of these no longer existing taxes with those related to acquiring property.
· The acquisition tax may also be known by other names. For example:
· property transfer tax (daň při převodu z nemovitosti),
· property acquisition tax (daň z nabytí nemovitosti),
· acquisition tax (daň z nabytí),
· real estate acquisition tax (daň z nabytí nemovitých věcí).
However, this tax has not existed since 2020, which saves owners of new properties up to 4% of the purchase price. This is great news, because for many people it makes the difference between being able to afford a property or not.
What about gift tax?
It has not existed since 2014. At least not under that name. Since 2014, gifts have been subject to personal income tax.
Which taxes can you not avoid?
Although many property-related taxes were abolished long ago, you still cannot avoid paying altogether. Which taxes should you watch out for?
Income tax on gifts
If you are an individual, income received free of charge is taxed at a rate of 15%. You can only avoid this tax if you are a relative in the direct or collateral line, or a person who lived with the donor, the deceased or the recipient in a shared household for the last year.
Real estate tax
Property tax, also known as real estate tax, was officially abolished in 2014. However, this does not mean you avoid paying it. Real estate tax is now divided instead into land tax and tax on buildings and units.
Do you need to know more about taxes and property? Read the article on tax topics on the Keller Williams website.
How property tax in the Czech Republic works
It helps to separate two kinds of tax. A one-off tax is charged when you acquire a property, for example by buying it or receiving it as a gift. A recurring tax is charged simply because you own the property, and you pay it again for as long as you remain the owner. The abolished acquisition tax was a one-off tax. Real estate tax, now split into land tax and tax on buildings and units, is a recurring tax.
Here is a simple example. Imagine you buy a flat for $200,000. Under the old acquisition tax, up to 4% of the price, or $8,000, could have gone to the state in one payment. Today you avoid that cost, but you still owe the recurring tax on the flat for every year you own it.
Common mistakes to avoid
- Assuming that because the acquisition tax was abolished, owning property is now tax free.
- Confusing income tax on gifts with real estate tax. They are separate taxes with different rules.
- Forgetting that land and buildings are taxed separately, so one property can involve more than one tax item.
- Treating the tax as a one-off cost when you budget for buying a home, rather than as an ongoing expense.
Frequently asked questions about property tax in the Czech Republic
Is there property tax in the Czech Republic?
Yes. Property tax under that name was officially abolished in 2014, but you still pay real estate tax. It is divided into land tax and tax on buildings and units. It is a recurring tax that you pay as long as you own the property.
Do foreigners pay property tax in the Czech Republic?
Real estate tax is linked to owning the property, not to your nationality. If you own land, a building or a unit, you should expect the same tax obligation as any other owner. It is a good idea to check your situation with a tax adviser if you are unsure.
Is property tax in the Czech Republic a one-off payment?
No. The one-off acquisition tax that applied when you bought a property no longer exists. Real estate tax is different because it is charged repeatedly for as long as you own the property. You should include it in your ongoing housing costs.
