CANCELLATION OF THE PROPERTY ACQUISITION TAX AND RELATED ISSUES

by
Michaela Fillette

In this article:

- cancellation of the Acquisition (Transfer) tax,

- change in the rules for the tax free profit from the sale of a property

- changes in the limit of the interests from a mortgage deduction.

Cancellation of the Property Acquistion tax:

The tax was cancelled 26.9.2020 with retroactive validity from 31.3.2020.

You don`t need to pay nor file this tax in case the deadline for the filing of your Acquisition tax would be normaly at 31.3.2020 or later.

It means that if you bought the property in December 2019 or later, you don`t need to pay the acquisition tax nor to file the acquisition of a property tax return.

Changes in the rules for the tax free profit from the sale of property:

The profit from the sale of a property is tax free if you sell the property in 2 or more years of your ownership and you lived in the property for at least 2 years (this rule is unchanged).

If you don`t live in the property and you sell it  in 10 years after the purchase of the property, the profit is not tax free and you need to tax it with 15%. In the past, the limit was 5 years. This new rule is valid for the properties purchased after 1.1.2021.

If you don`t pass any of the above criterias, but you use the profit for the purchase of the property for your living („bytové účely“), the profit from the sale is also tax free, but the purchase of the new property must be in 1 year from the sale of the old property.

The profit from the sale of the property which you plan to use for the purchase of new property for living must be announced to the tax office within the deadline for the filing of the personal income tax.

Lower limit of the interests from the mortgage tax deduction:

The limit for the Interests from the mortgage tax deduction is from 1.1.2021 only 150 000 czk  per year instead of 300 000 czk as it was before.

This is valid for all properties bought after 1.1.2021.

Your Expat taxes team