Until a few years ago, when buying a property, it was necessary to take into account the so-called property acquisition tax. This tax, which was paid by the buyer, was an additional financial burden when purchasing a home. However, changes in legislation have led to the abolition of this tax, which has simplified the whole process.
Please note that in 2019, an amendment to the law abolished the real estate acquisition tax and the decisive date in this respect is 31 March 2020. For more information, see the article Abolition of the real estate acquisition tax. Therefore, the tax is not payable on transfers for which the legal effects of the entry into the Land Registry occurred on or after 26 September 2020. The information below relates exclusively to the legal situation before this date.
Previously, the tax on the purchase of real estate (flats, houses or land) was overwhelmingly paid by the seller. Only if the seller agreed with the buyer, the buyer paid the tax. Over time, the rules have been reversed. How is it today?
The real estate transfer tax has been permanently abolished in 2020. This measure was intended to boost the property market and make it easier for people to acquire their own home. The abolition of the tax applies to all transfers of ownership where the entry of the ownership right into the Land Registry was made after 26 September 2020.
As we have already mentioned, until the end of 2016, the seller usually paid the tax and the buyer acted as guarantor in case the seller did not pay the tax properly. It was also possible to contractually transfer the tax liability to the buyer. Today, nobody pays the tax anymore.
The exemption applied to purchasers of new buildings when they acquired them for the first time. Specifically, the first acquisition of the title for consideration was exempt from property tax, in particular for:
The tax return was filed by the end of the third calendar month after the Land Registry authorised the registration of the title (for transfers outside the Land Registry after the month of acquisition). A copy of the transfer deed and the notification from the Land Registry were attached to the return (if an expert’s report was used, the report was also attached).
The tax base was the so-called acquisition value. In practice, the agreed purchase price was compared with the ‘comparative tax value’ (75% of the guideline value or 75% of the appraised price from the expert’s report) and the higher of these values was taken as the basis. The rate was 4% and the tax was rounded up to the nearest hundredth of a cent. Amounts below CZK 200 were not prescribed.
The payment itself had a two-step logic. An advance payment of 4% of the agreed purchase price was made with the return, payable at the same time as the return was filed. The tax office then assessed the tax: if it was higher than the advance, the difference was paid within 30 days of receipt of the payment notice; if it was the same, the advance paid was deemed to be the tax assessed.
The relations of the land owners can be settled in a different way than by selling or donating the land, namely by exchanging it. Read more about the tax aspects and practical advice for exchanging land in our next article.
Nowadays, there is no need to fill in a property purchase tax form and no property purchase tax is payable. Nevertheless, we sometimes come across misinformation or outdated information on the internet that may give the impression that tax is still payable. If you are buying a property, make sure you work with up-to-date information to avoid unnecessary stress.
What has changed in practice
It is no longer necessary to take this tax obligation into account when purchasing a property today. However, it is still important to pay attention to the legal requirements of the property transfer, whether it is drawing up the purchase contract, verifying the property’s status at the land registry or arranging financing.
If you have come across information on the internet about property transfer tax or references to the obligation to file a property transfer tax form, be aware that this information is out of date and the tax obligation is no longer valid.
Thanks to the repeal of the Real Estate Transfer Tax Act, buying property today is easier and more affordable than before.
We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Today, in the vast majority of real estate transfers, an expert’s report is no longer required to accompany the tax return. In the case of ordinary transfers for consideration of flats, family houses, cottages or garages, an expert’s report is therefore not required, where, as we have already mentioned, the tax office compares the agreed purchase price with the normal price. This price is determined by the authority according to price maps or table values according to the condition of the property being transferred. However, if the buyer is not satisfied with this comparison, he may compare the purchase price with the price established by an expert’s report. The purchase price will then be compared with 75 % of the price according to the expert’s report.
Example: Martin bought a cottage in very poor condition so that he could renovate it to his liking. The purchase price was agreed at CZK 100,000, taking into account the condition of the cottage. However, the normal price was CZK 275 000. It was therefore more advantageous for Martin to have an expert’s report prepared, which valued the cottage in accordance with the condition of the property at CZK 100,000.
If you want to draw up or check the purchase contract, get acquainted with our offer.
Download the free e-book 5 tips to buy or sell property risk-free and go through the process of selling or buying a house, apartment and land smoothly.
No one pays tax on the acquisition of immovable property anymore – it was abolished by an amendment in 2020; the decisive date is 31 March 2020 and the abolition applies to transfers for which the entry of the ownership right into the land register was made after 26 September 2020. Previously, the tax was usually paid by the seller (with the possibility of contractually transferring it to the buyer), today no declaration is filed and no tax is paid. Practical implications: the buyer saves the earlier 4% of the price, the transfer is administratively simpler and the measure has boosted the real estate market. Beware of outdated information that still mentions the obligation to pay.
For current real estate transactions, this means focusing mainly on good quality contracts, checking the status at the Land Registry and financing; an expert’s report is usually no longer required for tax purposes. If the comparison of the agreed price with the “normal price” does not suit the buyer, an appraisal can be prepared and compared with 75% of the value. Overall, this makes buying/selling easier and more affordable today than before.
No. Acquisition tax has been abolished and there is no substitute tax for the acquisition of the property itself. However, you still pay other related taxes (e.g. property tax from the following year, or VAT on new buildings included in the price).
The refund is due where the entry into the Land Registry took place in December 2019 or later; it is refunded to the taxpayer in the specific case.
You don’t typically need it for tax purposes when you buy, but it can be useful for the bank (securing a loan), for splitting the price in a contract, for transfers between related parties, or in disputes over defects and price discounts.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.
