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 will be 31 March 2020. For more information, see the article Abolition of the real estate acquisition tax. The information below relates exclusively to the legal situation prior to this date.
Previously, the tax on the acquisition of immovable property (flats, houses or land) was overwhelmingly paid by the seller. Only if the seller and the buyer agreed, the buyer paid the tax. Over time, the rules have been overturned. How is it today?
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, no one pays the tax anymore
In 2020, legislation changed and the real estate transfer tax was finally abolished. This measure was intended to boost the real estate 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.
Tip: The relationship between landowners can be settled in a different way than by selling or donating the land, by exchanging it. This is not a frequent option, but we do see it from time to time. For example, when heirs inherit different plots of land or parts of land that they would like to consolidate and organise more efficiently. 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 tax form and no property tax is payable. Nevertheless, we sometimes come across misinformation or outdated information on the internet that may give the impression that the tax is still payable.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 a 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 taxes or mentions of the obligation to file a property transfer tax form, know that this information is outdated and the tax obligation is no longer valid.
Thanks to the repeal of the Real Estate Acquisition Tax Act, buying property today is easier and more affordable than ever 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.
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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.
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