As the name suggests, property tax is paid on the purchase or exchange of real estate. However, it has undergone a major change since 2016. The tax is always paid by buyers instead of sellers. It will therefore effectively be a tax on “acquisition”. And how high is the tax actually?
Please note that the real estate acquisition tax has been abolished and the effective date in this respect is 31 March 2020. For more information, see the article Abolition of real estate acquisition tax.
Many people still remember the former situation. The tax was usually paid by the seller and the buyer was only in the position of a guarantor, whose obligation only shifted if the seller failed to pay the tax. However, under the Senate’s statutory measure regulating the tax on the acquisition of immovable property, it is the purchaser who is the taxpayer in the case of a transfer of immovable property for consideration.
Today, the seller is not even a guarantor and does not actually have to be concerned with the payment of the tax. Since November 2016, the tax has only been imposed on buyers who, at worst, have at least a property that the state can take away if they do not pay the tax. According to the law, no other choice is possible.
Tip: It is not for nothing that they say that what is written is given. In law, this is doubly true. Whether you are buying or selling a property, everything that is important should be written in the contract. In our next article, we therefore bring you a list of what should be included in a property purchase contract.
Onlytransfers of real estate for consideration are subject to tax – the most typical example is the purchase of real estate. However, it can also be, for example, an exchange of land. Conversely, transfers of real estate without consideration, most often in the case of a gift of real estate, are never subject to tax. The law also provides for certain exceptions where no tax is payable even though the transfer is for consideration. These are mainly sales of new houses or flats when they are first sold.
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The amount of the tax has not changed despite the change in the taxpayer, although this was also originally planned. For the most common transfers for consideration of flats, houses, cottages, chalets or garages, the property tax is calculated as 4% of the agreed purchase price. However, the purchase price must be more than 75 % of the local normal price. This will be verified by the tax office from price maps and other documents collected by the tax office. If you are filing a tax return, you often have to give the tax office detailed information about the property you are buying, from the age of the building to the number of toilets.
Tip: If you are a property owner, you are subject to the obligation to register for tax. You can do so by filing a property tax return. But you don’t have to file this every year; in principle, you only need to file it once. So when and under what conditions does filing a tax return apply to you?
However, if the property you are selling is exceptional for some reason (e.g. in extremely poor condition and in need of extensive renovation), this method may not be advantageous. The purchase price is small, but the surrounding properties are expensive and so the tax is high.
Therefore, the legislator has also allowed for alternative tax determination. You can have an expert’s report done (in addition, you can deduct the cost of the report from your tax base). Compare the amount of the agreed price in the contract with 75% of the price in the appraisal. Tax is again paid on the higher amount.
You can file your tax return electronically or on paper. It is submitted to the tax administrator, which is the tax office in whose district the relevant land or building is located. Unlike the income tax return, the return must be submitted by 31 January and includes all buildings acquired or altered in the previous year.
Under what conditions do you have to file a tax return?
Tip: Planning to donate your property? Donating or accepting a property is a big step in life. We can help you make it happen so you don’t step on the wrong foot. We will prepare a complete contractual and legal service for you, including the gift agreement, registration in the Land Registry and taxes. We can do it within 48 hours, flawlessly and professionally.
As mentioned above, you can also file your real estate tax return electronically. To file your tax return electronically, we recommend using the Electronic Filing for Tax Administration (EPO) or the Online Tax Office. However, only full tax returns can be filed this way, not partial returns.
If one person has multiple properties throughout the Czech Republic, he/she cannot file one summary tax return, but must file individual returns with the individual tax offices in whose territorial jurisdiction the properties are located. There are a total of 14 tax offices in the Czech Republic. Their territorial jurisdiction follows the boundaries of the regions. However, it is possible to file a summary tax return for several immovable properties located in the territory of one office.
Tip: When buying a property, buyers must not forget about the obligation to pay real estate acquisition tax, often still referred to by its former name as real estate transfer tax. Read who pays the real estate transfer tax.
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