Property taxes in the Czech Republic

Briefly about the main thing

The Czech Republic is one of the most comfortable states in Eastern Europe, not only in terms of accommodation, security, services and infrastructure, but also in terms of taxation of the purchase and maintenance of real estate.

Taxes paid by foreign buyers of real estate in the Czech Republic do not differ from taxes paid by ordinary citizens of the Czech Republic. In general, if we compare the Czech taxation system with neighboring European countries, it is characterized by simplicity and transparency, and the amounts that taxpayers pay, real estate market experts call more than affordable.

Transaction costs

According to the legislation of the Czech Republic, when buying real estate, the buyer pays a tax on the transfer of ownership rights in the amount of 4% of the value specified in the contract. This, however, does not apply to new buildings, the purchase of which is exempt from tax. The tax and tax return must be paid and submitted to the relevant authorities within up to three months after the transaction, starting from a new calendar month. That is, if the owner entered into the rights with an entry in the Cadastre on May 15, then he has June, July and August to deposit funds and submit a declaration.

During the purchase, a fee is also paid at the Cadastral Chamber and a deposit account with a notary / lawyer, but often these costs are borne by the real estate agency that accompanies the transaction. In the event that a mortgage is issued for real estate, it will incur additional costs (bank, registers, notaries, Cadastre), which will depend on the conditions provided by the bank, and which we will discuss below.

Stages of the transaction

1. Choosing a real estate object;
2. The agency checks the cleanliness of the facility, drafting and signing a preliminary contract, making a deposit;
3. Preparation and signing of an agreement with a notary/lawyer/bank on opening a depository account (the deposit fee is usually paid by the agency), preparation and signing of a purchase and sale agreement;
4. Payment of the full value of the transaction under the purchase and sale agreement to the depository account;
5. Submission of documents to the Cadastral Department (the fee is usually paid by the agency). The seller receives the money only after the new buyer is "registered" in the Cadastre.
6. After registration of the real estate object for the buyer, together with the agency, a tax declaration is drawn up and submitted to the tax authorities. The buyer pays a tax on the transfer of ownership rights in the amount of 4% of the value of the object.

Annual property tax

The amount of the annual real estate tax is calculated by the tax service according to the parameters set by law. If we are talking about an average city apartment, then the amount of tax will be only a few hundred Czech crowns. So, for an apartment in Prague with an area of 50-60 sq. m. m its amount is CZK 640-770 (€25-30) per year. There is no need to remember about the deadlines for paying the tax, the tax service will send a receipt for payment itself (as a rule, the deadline is the last day of May).

Attention: if the property was purchased in 2017, then by January 31, 2018, the owner must file a tax return on whether he has a new property. If the real estate has not changed its owner this year, then you just need to wait until March 31 to pay the annual tax. A receipt with a fixed amount will come by mail, and you can pay it at any post office or by sending money to the account specified in it.

Income tax when renting out real estate

The amount of income tax from renting out real estate is 15% of net profit and is paid in cash or non-cash until the end of March next year, at the same time when the tax return is filed.

Income tax on the sale of real estate

Income tax, as in the case of rent, is 15% and is paid until the end of May next year. If the owner sells a property in which he was not registered, five years after the purchase, or two years later in the case of registration, no income tax is paid.

Regular payments for the maintenance of real estate

In the Czech Republic there are two types of payments of regular payments for the maintenance of real estate: one category is paid to the so-called Society of Owners of residential premises, where all suppliers are selected collectively, if we are talking about an apartment building, and the second category includes payments to suppliers of electricity, gas and Internet. In this case, all contracts are concluded independently by each of the owners.

The owners' society, as a rule, is paid for water, garbage collection, lighting and cleaning of common areas, security fee and reception desk, if there is one, repair fund, etc. The amount of these payments depends on the size and condition of the residential building and can vary from CZK 2000 to CZK 6000 (from €77 to €233).

Payment of bills for the second category is made through the introduction of a so-called deposit, which can be monthly, quarterly or semi-annual. Most often, owners choose a monthly form of payment. It works like this: every month the owner pays a certain amount, which is prescribed by the supplier based on the size of the property and the number of people living in it. In the spring of each year, a recalculation takes place, on the basis of which the amount is either paid extra, or the balance is transferred to the next season (some suppliers refund the overpayment). Based on this recalculation, the collateral is automatically increased or decreased to match the real expenses of the owner.

As an example, we can consider a two-room apartment with gas heating and a gas stove, in which two people live. The amount of the deposit in this case will be about CZK 1000 (€38) for electricity and CZK 1000 (€38) for gas. If there is no gas in the house, but there is central heating, then it is paid for in exactly the same way, only it belongs to the first category, that is, the owner does not need to conclude a contract with the supplier company himself. It is also worth noting that water is also paid for by a deposit. The total amount of utility payments for an apartment in Prague with an area of 50-60 sq. m. The m will be about CZK 3800-4300, that is, 150-170 euros per month.

Additional payments for mortgage loans

When calculating their mortgage loan costs, the future borrower should not forget about the additional costs that arise during the loan processing. These expenses can be both temporary and permanent.

Below is an example of possible additional costs that a future borrower may face:

• Opening an account in a Czech bank. As a rule, opening a bank account in the Czech Republic is free of charge, the client is charged for managing the credit account. Each bank has its own conditions, on average it is an amount from CZK 150 (€5,8) per month.
• Payment of the bank's commission for the services provided, preparation of the necessary package of documents. It is better to entrust the preparation of a package of documents to specialists who easily navigate the local lending market, are familiar with all banking offers and products. Firstly, this is a significant saving of time, and secondly, incorrect actions can turn into unnecessary expenses for the owner. The cost of services varies from 3% to 6% of the loan amount, and also depends on the complexity of the transaction and the amount of work.
• Property valuation. The procedure for assessing the value of real estate is an integral part of the process of obtaining a mortgage loan, based on the assessment of real estate, the bank will determine the loan amount. The price for real estate valuation starts from CZK 5000 (€200).
• Real estate insurance. Real estate insurance costs are a percentage of the real estate value. Its amount depends on the general situation on the market and on average reaches from CZK 3000 (€115) to CZK 10,000 (€400).

Five tips for foreigners — future property owners in the Czech Republic

1. Be sure to resort to the services of a serious and trusted accountant.

2. To search for real estate and make a purchase and sale transaction, be sure to hire a reliable real estate agency with extensive experience in the market.

3. When buying a home through an agency , specify whether it can help with the preparation of a tax return for the transfer of property rights (as a rule, agencies provide this service for an additional fee).

4. Do not be afraid to contact official authorities with questions— they will definitely help you.

5.Check your mailbox regularly and designate it with your last name. In the Czech Republic, it is not customary to write the apartment number in the postal address, only the house number and the addressee's surname.

Portal HomesOverseas.ru thanks for the help in preparing the article Anna Shalygina (VK Real s.r.o.) and Anna Koldova(EuropaReal).

_{photocredits: dmitry kruglyak / flickr}

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