Have you sold your house, flat or land and are wondering how to deal with your tax liability? In this article you will find the latest rules for the 2025 property sales tax, practical examples and tips on how to reduce or avoid the tax altogether.
Have you sold your house, flat or land and are wondering how to deal with your tax liability? In this article you will find the latest rules for the 2025 property sales tax, practical examples and tips on how to reduce or avoid the tax altogether.
We have discussed what taxes are payable on the transfer of real estate in a previous article. In today’s article, we will focus mainly on how to correctly declare and comply with the income tax liability .
This is where every seller should take heed, because while sales tax directly applies to them, there are many exemptions that can exempt them from paying the tax. These are mainly the following situations:
We have described the exceptions in more detail in the article Tax Obligations on Transfer of Real Estate.
Special care is required for properties listed as business property or leased on a long-term basis. If the property was part of the business until two years ago, the income from the sale is not exempt; for properties disposed of, the period when they were in business property is not recognised for the “long” ten-year test.
In addition, for VAT payers, the sale may be a taxable supply, particularly if it is the first transfer for consideration of the building within two years of completion; although this is often only a “formal” obligation on paper, underestimating VAT has significant consequences.
The situation is also different in the case of jointly owned and jointly held sales. Each co-owner declares his or her pro rata share and independently assesses whether the time test is met; the spouses normally split the income from the community property in half, unless they agree otherwise.
A practical complication is the independent calculation of costs – in particular if one spouse has invested in the joint property himself, it is necessary to prove the amount attributable to his share.
To get a better idea, let us imagine three typical situations. In the first example, the owner sells the flat after six years of ownership and three years of living there: the time test is met and no tax is payable. In the second example, the investment flat has been rented for five years; however, the owner owned it as a business and only disposed of it last year – so the exemption does not apply and the gain is taxed. The third example is the sale of a family home coupled with the purchase of a larger house within six months – if the money is used to pay for new housing needs, the exemption can again be claimed.
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The aforementioned exemptions from real estate sales tax don’t mean that you don’t have paperwork in front of you – income over 5 million. You have to notify the tax office of the sale of the property, otherwise you risk a fine.
Since 2015, there has been an obligation to notify the tax office of any exempt income if its value exceeds CZK 5 million. Until the end of 2020, real estate was exempt because the tax office could easily obtain information on sales from the land register. However, as of 1 January 2021, the income from the sale of real estate must be declared and at the same time it must be documented that one of the conditions for tax exemption has been met. In the case of the sale of a cooperative flat, the reporting obligation will always arise, regardless of the amount of income.
It is certainly not worth circumventing the notification obligation or even forgetting about it. If the income is not reported on time (or even not reported at all), there is a penalty. The maximum penalty is 15% of the unreported income. In addition to the theoretical penalty of 15% of the unreported amount, the Tax Administration sets two more lenient rates: 0.1% for late submission without being asked and 10% for compliance only when asked by the tax authorities. Although in practice the penalties tend to be lower, proper notification is the cheapest prevention.
The notice does not have a prescribed form. However, the Ministry of Finance has issued a model form. The notice can be given in writing, either in paper form or electronically, or orally on the record. It can also be submitted electronically, but only by a data message with a verified identity.
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.
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The seller (individual or legal entity) is always liable for tax unless the income is exempt. In the case of joint ownership or SJM, the tax is divided according to the shares.
The sale of a property is income like any other, so it is included in the tax return, which is normally due by 1 April of the following year (1 April 2025 for 2024 income). The return can be filed electronically up to 2 May of the same year. The third possible deadline for filing the return is 1 July, but only if the return is prepared by a tax adviser or if the individual is subject to a statutory audit.
Income from the sale of real estate is governed by the Income Tax Act of the Czech National Council, where it falls under other income treated in Section 10.
A tax return must be filed in any case in the case of a sale of real estate that is not exempt from tax. The annual tax settlement made by the employer is not sufficient. A tax return must then also be filed by a pensioner or other person with no other taxable income.
When completing your property tax return, you will be particularly interested in Schedule 2, where you will list the sale price of the property and the expenses you had to pay for the property and in connection with its sale. The taxable amount is the net profit, i.e. the difference between the amount spent and the expenses incurred in acquiring and subsequently transferring the property.
Include in your expenses not only the purchase price of the property (the price you paid for it yourself when you bought it), but also the costs associated with the sale of the property (the cost of cleaning, altering and clearing the property, the fees for arranging the sale, the cost of preparing contracts and other documents, or perhaps a solicitor’s fee for holding the money) and the amount invested in any renovations. However, in this respect, expenditure is only understood to be modifications that have led to the appreciation of the property, e.g. insulation of the house, replacement of windows, etc.
What about if you have acquired the property for free and there is therefore no purchase price? In the case of an inheritance, the purchase price is the amount stated in the court decision, whereas in the case of a donated property, you need to have an expert’s report (valid on the date the property was transferred to the new owner). This amount is then stated as the purchase price and is supplemented by the standard expenses related to the renovation and sale of the property.
Although the rate of income tax on the sale of a property is often simplistically described as 15 per cent, it is in fact a progressive tax. The part of the gain up to a threshold income of thirty-six times the average wage is subject to a 15% rate, while the amount above this threshold is taxed at 23%. For 2024, the threshold is CZK 1 582 812 (36 × CZK 43 967), and for 2025 it is CZK 1 676 052 (36 × CZK 46 557). Of course, if the sale is a loss, no tax arises as only the real profit is subject to tax.
Previously, it was also compulsory to pay tax when buying a property. However, this was abolished in 2020.
Tax credits are normally used to reduce tax on income from employment. However, if you don’t have such income, you can use tax credits on income from the sale of property. In addition to the basic taxpayer discount, other discounts are available. The most common are the disability and PWD/P discount and the discount for a spouse caring for a child up to 3 years of age and with own income up to CZK 68,000 per year.
The same applies to tax deductions. Some other items can be deducted from the tax base:
We will take care of protecting your rights and meeting all legal obligations. We know which contracts need to be prepared, what needs to be processed at the Land Registry and how to meet all tax obligations. We will guide you through the whole process or any part of it and make sure everything is done legally correctly.
Income tax is not payable on the sale of real estate if the seller meets one of the exceptions: has owned the property for at least 5 years (10 years for property acquired after 1 January 2021), has lived in the property for two years prior to the sale, uses the proceeds for his or her own housing needs, inherits the property in a direct line with the timing test met, or sells a co-operative share. Caution is required for properties classified as commercial property, long leases or for VAT payers when first transferring a building within two years. Even exempt income above 5 million. However, it is necessary to notify the tax office, otherwise a fine of up to 15% of the unreported amount is possible.
If the conditions for exemption are not fulfilled, the seller reports the income in the tax return (Annex 2) filed generally by 1 April of the following year; for electronic filing by 2 May, or by 1 July with a tax advisor. The tax base is the difference between the sale price and the provable expenses (purchase price, renovation, selling costs). Profits up to 36 times the average wage are taxed at 15%, above this threshold at 23% (for 2025 the limit is CZK 1,676,052). Common tax deductions and allowances can be claimed, such as mortgage interest, pension or life insurance.
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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