With the abolition of property tax, it might seem that no tax obligations arise when selling and buying a flat or house. However, the opposite is true. Taxes still need to be thought about. Which ones apply to the seller and which ones do the buyer have to take care of? The answer can be found in the following article.
When selling real estate in 2026, the seller most often deals with income tax or VAT if they are selling as a taxpayer and the exemption conditions are not met. The buyer, on the other hand, usually deals with the real estate tax after the transfer. The key is to properly assess whether the sale is subject to the time test, living in the property or using the money for your own residential use. An error in the exemption assessment or in the timing of the sale can result in unnecessarily large tax consequences. The current tax rules for 2026 are based on the amended income tax and sales tax rules.
Are you dealing with the sale of an apartment, house or land? As part of our Buy or Sell Property service, we will review your contracts, assess the tax risks and set up the entire transfer to be legally and tax safe.
| Tax / obligation | Who typically handles it | When it arises | Note |
|---|---|---|---|
| Income tax on the sale of real estate | Seller | If the exemption is not met | Calculated on the gain, not the entire purchase price |
| VAT | VAT-paying seller | Only in statutory cases | Typically for some newer buildings or building plots |
| Notification of exempt income | Seller | Only in certain cases | Must be assessed separately |
| Real estate tax | Buyer/new owner | After acquisition of ownership | The status on 1 January is decisive |
The very first tax we need to mention concerns the seller. This is income tax, sometimes inaccurately referred to as tax on the sale of immovable property, which is calculated on the profit, i.e. the difference between the sale price and the purchase price of the property. Expenses related to the sale (commission to the real estate agent, preparation of the sale and purchase contract, expert opinions) or reconstruction of the property (however, only such modifications that are directly related to the appreciation of the property, e.g. replacement of windows or insulation, are counted) are deducted from the sale price. If the purchase price, after adding the costs of reconstruction and sale, exceeds the sale price, no tax is of course payable because no profit was made.
It should be taken into account that the personal income tax has two percentage rates. In addition to the basic rate of 15%, a higher rate of 23% will be added in 2021 for the part of the tax base that exceeds 36 times the average wage (for 2026 this limit is CZK 1,762,812).
Therefore, if the seller collects not only the profit from the sale of the apartment in a given year, but also an extraordinary remuneration from the employer, a part of his tax base may “swing” to the higher rate.
A practical example: on 1 February 2026, Mr and Mrs Novák sold their flat for CZK 6,000,000. They bought the property six years ago for CZK 3,800,000 and invested CZK 400,000 in renovations. The profit is therefore CZK 1 800 000. Mrs Nováková’s husband also received an extraordinary remuneration of CZK 500 000 in addition to his salary. The sum of the income (profit from the sale + the husband’s salary) brought the couple above the limit; anything above the limit is therefore subject to the 23% rate.
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Before you start calculating how much tax you’ll pay on the sale of your property, see if any of the exemptions apply to you. In fact, a significant number of sellers are completely exempt from the tax. You don’t pay tax if you meet at least one of the following conditions:
However, all exemptions only apply to individuals. If the property is included in business assets, the tax must be paid in any case. If you are an individual and meet any of the conditions for exemption, you do not have to include the income from the sale of the property in your tax return at all.
If the property being sold is part of the community property, the spouses can choose which of them will tax the sale proceeds. For purposes of the timing test, it is sufficient for either spouse to meet the condition.
In practice, the income is then often taxed on the spouse who, due to his/her other income, remains below the threshold for the second income tax rate and thus does not apply the 23% rate itself.
It is in the assessment of the exemption that most mistakes are made in practice. It is not enough to rely on the general rule that “no tax is payable after a few years”. The specific dates of acquisition, the manner of use of the property and whether the money from the sale was actually used for the owner’s own housing needs are decisive. If you want to be sure before signing the purchase contract, it is worth having the entire transfer and the tax implications checked by a lawyer.
It should not be forgotten that the Income Tax Act may in some cases impose an obligation on an individual to notify the tax authorities of exempt income exceeding CZK 5 million. However, this obligation does not always arise automatically in the case of income from the ordinary sale of immovable property registered in the Land Registry. It depends on the legal basis for the exempt income and whether a statutory exemption applies in a particular case.
Even if the seller sells more than one property in the same year, it cannot be automatically assumed that the notification obligation will always arise. Again, the decisive factor is the legal ground on which the individual income is exempt and whether a statutory exemption applies. If a reporting obligation does arise, it must be complied with no later than the deadline for filing the tax return for the relevant tax year, even if the seller would not otherwise have had to file a tax return. The penalty for failure to do so may be a penalty of up to 15% of the unreported income.
Mrs. Nováková was selling an apartment in 2025 that she had rented for several years, and shortly before the sale she considered whether she could exempt the income from tax. At the same time, she expected to use the proceeds to buy her own home. The problem was that she had incomplete documentation for the renovation, vaguely documented use of the flat and did not know whether she also had a reporting obligation to the tax office.
As part of the legal service we first went through the title, dates, use of the flat and the forthcoming use of the sale money. We then helped the client to assess which regime was applicable to her case, what documents she should retain and what already needed to be documented to the tax authorities. As a result, the transfer was set up correctly before the contracts were signed, and the client avoided a situation where she would have been dealing with retroactive tax assessments or penalties for failure to report.
There are a lot of myths about tax. Some think that the property sales tax will be abolished in 2020. But that is not true, because it is confused with property tax. Read on to find out what has changed in practice with the abolition of the property tax and what it means.
If the seller is a VAT payer and is not subject to one of the exemptions, he/she must also pay VAT at the rate of 21% of the property price (or 12% in the case of so-called social flats and houses).
From 1 July 2025, the amendment to the VAT Act has reduced the original five-year time test to 23 months and only taxes the first supply of completed property. Any subsequent transfers after this period are no longer exempt.
The seller is subject to VAT and the object of the sale:
Have you bought a house or land and are about to file your property tax return? Find out how to calculate the tax with our article.
Even though you are not obliged to pay VAT, you can opt for voluntary taxation during the next transfer so that you do not lose the VAT deduction applied during construction or reconstruction. Now you need the consent of the VAT-paying buyer (or a person registered for tax in another Member State) to do this. In practice, this often results in two options when negotiating the price: with VAT and without VAT.
Practical example: a small developer completes a terraced house and sells it to its first VAT-paying client 14 months after completion. The client can claim a deduction. The developer wants to sell the second house after 26 months. In order to retain the right to deduct the second building, it agrees with the purchaser-taxpayer to tax the sale voluntarily, so that 21% VAT is added to the price but subsequently deducted by the purchaser.
As of 1 January 2025, an employee of the seller is considered a so-called connected person. Therefore, if a VAT-paying entrepreneur sells a property to his employee at a price lower than the “normal price” (i.e. the normal market value of the property at that place and time), he must calculate VAT on this normal price, not on the agreed price. The purpose of the regulation is to prevent the tax base from being lowered on purpose within a group with personal ties. It is therefore worthwhile for the seller to prove that the agreed price corresponds to market conditions – for example, by means of an expert’s report.
Another important new change is that the VAT Act now classifies as building land not only those plots of land on which a building is already under construction, but also those which are designated for development according to the zoning plan or on which preparatory work has been carried out (for example, the connection of utilities). Such land is usually subject to the basic rate of 21%, which can significantly increase the purchase price.
While the previous two taxes are paid on a one-off basis, property tax is an annual affair and applies to every property owner. It is therefore payable by the purchaser after the transfer of the property. The tax must be paid by anyone who owns any property on 1 January. Each owner declares himself or herself liable for the tax by filing a property tax return with the local tax office by 31 January of the year for which the tax is first payable. In subsequent years, it is not necessary to file the tax return again, but only to pay the tax itself.
However, the seller can opt out of the property tax so as not to pay the tax himself. In most cases, however, the tax office will find out that the property has been sold so that the new owner applies for the tax and files the tax return himself. The tax office will then de-register the former owner itself. However, if the seller does not want to rely on this, he or she can and should file a property tax disclaimer and support it with an extract from the Land Registry. Then he assumes no risk.
You can read more about how to file your property tax return in our article.
At Affordable Lawyer, we protect the rights of sellers and buyers. We already know exactly which contracts need to be prepared and which obligations must not be forgotten. We will be happy to walk you through the entire process and make sure that everything goes smoothly from a legal point of view, without any mistakes that could lead to a significant delay in the sale or a significant financial loss.
Selling a property in 2026 does not only mean signing a purchase contract and a proposal for entry into the Land Registry. In addition to the transfer itself, the tax implications also need to be properly assessed. The seller most often deals with income tax or VAT if he sells as a taxpayer and the conditions for exemption are not met. The buyer then typically assumes the real estate tax obligations after the transfer.
The most important thing is to correctly assess whether the sale proceeds are exempt from income tax. In particular, the period of ownership, the actual living in the property or the use of the money for one’s own housing needs are decisive. For VAT payers, it is also necessary to examine whether the transfer is subject to VAT or exempt from VAT. The details are also crucial: the date of acquisition, the nature of the property, the renovation, the status of the seller and the documents properly kept.
It is in these details that most mistakes are made in practice. People often rely on generalities but overlook the specific terms of the law or the related notification obligations. In the case of larger sums, the error is not only an administrative problem but also has a significant financial impact. It is therefore worthwhile to resolve tax and legal issues before signing contracts, not after the fact.
When dealing with the sale or purchase of an apartment or house, people often confuse terms such as property sales tax, property income tax, real estate tax, property acquisition tax or property transfer tax. To give you a better idea, it is good to know that the real estate sales tax is a different type of tax than the real estate property tax, which is paid annually only on ownership. The terms real property acquisition tax, real property acquisition tax law, real property land tax or real property transfer tax and are now used rather historically but still appear in common parlance. If you are dealing with real estate sales tax or tax on the purchase of real estate, it is always a good idea to find out if it is a one-time real estate sales tax, an earlier real estate acquisition tax, or an ongoing real estate tax.
Generally, if you make a gain on a change of ownership, you will be subject to income tax on the sale of the property, sometimes referred to simply as property sales tax. In old contracts you may still see that it says real estate transfer tax, but nowadays you virtually always deal with real estate sales tax.
Income tax on the sale of real estate (often referred to as property sales tax) is always payable if you make a profit on the sale and do not meet the conditions for exemption. The tax is based on the difference between the sale price and the purchase price plus provable costs (renovation, real estate agent’s commission, legal services).
You pay tax when you do not meet any of the exemption criteria, especially if:
you sell the property before the end of 5 years (for properties acquired before 31 December 2020),
you sell before the end of 10 years (for properties acquired from 1 January 2021),
you have not lived in the property for at least 2 years,
you do not use the money from the sale for your own housing needs,
the property is a commercial property,
you are selling as an investor or entrepreneur and the income falls under business.
In these cases, the gain is taxed at 15%, or partly at 23% if the total annual tax base exceeds the statutory limit.
Property tax is an annual tax that is payable whether you are selling or buying property. Unlike the one-time income tax on the sale of real estate or the historic tax on the acquisition of real estate, this tax is tied to who owns the property on January 1. Therefore, after the sale, it is important to not only resolve the income tax on the sale of the property, but also what is known as a property tax opt-out on the part of the original owner. This gives a clear signal to the tax office that you no longer own the property and the real estate tax is to be paid by the new owner.
No. You don’t pay income tax if you meet any of the statutory conditions for exemption, such as the time test or the living in the property condition.
No. Income tax is generally calculated on the profit, i.e. the difference between the income from the sale and the deductible expenses.
Typically when you meet the statutory time test, live in the property for at least two years, or use the money from the sale for your own housing needs.
Only in some cases. In particular, the seller is a VAT payer and the type of property he sells.
Real estate tax is handled by the new owner. The decisive factor is who owns the property on 1 January of the relevant year.
Sometimes, yes. It depends on the specific reason for the exemption and the circumstances of the case, so it is always advisable to assess this independently.
We provide comprehensive legal services related to the purchase or sale of real estate, including reservation agreements and escrow services. We can also assist with land registry and tax matters. We can handle everything within 48 hours, even when purchasing from a developer.
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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