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Who pays annual property tax and for what
Property tax is a property tax that is regulated by the Real Property Tax Act. It stipulates that the taxpayer is any natural or legal person who owns or uses immovable property (land or a building).
In the vast majority of cases, the taxpayer is the owner of the property. Sometimes, however, it may also be a trust or a unit trust (if the property is owned by the unit trust) or a builder who has the right to build on the land.
Real estate tax is the collective name for two separate taxes. These are the land tax and the buildings and units tax. If we emphasize their separate nature, it is also reflected in the fact that they are listed separately in the tax return.
The subjects of land tax are:
The subject of the tax on buildings and units (flats and non-apartments) are:
- buildings and units situated in the territory of the Czech Republic and
- completed or in use.
The law regulates the types of land and buildings that are completely exempt from the tax. These include, for example, land and buildings owned by the state or a municipality or land and buildings used for schools, galleries and health care facilities. Buildings and units are not subject to the tax on buildings and units, nor are buildings consisting of taxable units (e.g., apartment buildings as a whole).
We can help with the purchase of the property and tax obligations
Are you looking to sell or buy a property? Or do you just need advice on how to proceed after the transfer is completed? We will be happy to help you with everything. We will prepare the necessary contracts and advise you on how to meet all obligations and protect your rights.
Tip: Each taxpayer calculates the amount of the tax himself in his tax return. This is done not only with the area of the land or building, but also with the statutory rates and coefficients (local coefficient and coefficient according to the size of the municipality). How is the tax amount calculated? We have dealt with this in a separate article.
How to opt out of paying tax
If, on the other hand, you previously owned the property and paid the tax annually, but on 1 January of the new year you are no longer the owner, you must notify the tax office so that you no longer pay the tax. There is no specific form, just a simple computerised or handwritten notice to be delivered to your tax authority (i.e. the local tax office) by 1 February at the latest.
How and when is property tax paid?
You can pay the tax by bank transfer, bank transfer, SIPO or cash at the tax office. If the tax exceeds CZK 5,000, it is possible to split the payment into two instalments. The standard deadline for paying the tax is the end of May. If the payment is divided into two instalments, the second instalment must be paid by the last day of November.
The tax year is the calendar year and the tax return must be filed by the end of January, with January 1 being the relevant date. However, the return is not filed repeatedly (as is the case for income tax, for example), but only once. Thereafter, the tax is “only” paid.
Tip: Every property owner is required to register for tax. This can be done by filing a real estate tax return, which can be filed electronically or in paper form. However, the tax return is not filed annually, but only once. When it must be filed and what its requirements are, we have discussed this in a separate article.
Many new property owners wonder why they are asked on their property tax form if they are farmers or fishermen. This is because people who farm and fish have a staggered deadline for paying their taxes – specifically August 31 and November 30.
What happens if you don’t file or pay your property tax on time?
- The penalty for late filing starts on the sixth business day after the deadline and is 0.05% of the assessed tax for each day you are late.
- If the property tax is not paid on time, you will not avoid late payment interest from the 5th day after the due date. These are equal to the two-week repo rate set by the CNB (currently 0.05%), plus 14 percentage points.
Tip: You will not be fined if the fine does not exceed CZK 200.
What to do if you no longer own the property?
Have you sold or donated a property in the previous calendar year? Then you are no longer liable for property tax. However, you must notify the relevant tax office in good time.
- §Section 13a(9) of the Real Estate Tax Act states: “If a person who was a taxpayer of real estate tax has lost the status of a taxpayer because during the tax year the ownership or other rights to all real estate in the territorial district of the same tax administrator which was subject to real estate tax with him have changed or these real estate assets have ceased to exist, he is obliged to notify the tax administrator of this fact no later than 31 January of the following tax year.”
There is no prescribed form to opt out of the tax, so a free form letter or a new tax return can be used if you still own any real estate in the zoning district.
Tip: The jurisdiction of the tax office is determined by the location in which the property is located, not by your permanent residence.
Property Tax Return Summary:
- A tax return must be filed by anyone who acquired real property in any way during the previous calendar year.
- The obligation also applies to anyone who has sold real property but continues to own other property in the same county.
- Normally, property tax returns must be filed by 31 January.
- The tax return must be filed in the county in which the property is located.
Are you dealing with a property purchase or tax liability?
At The Affordable Advocate, we can help you with everything. We will protect your rights, prepare contracts, and advise you on the obligations that must be met. We will guide you through the entire process and make sure everything goes without a single mistake.