Abolition of real estate transfer tax approved

On 15 September 2020, the Chamber of Deputies approved the governmental bill that abolishes the real estate transfer tax with retroactive effect. Owners of real estate that was recorded in the Real Estate Register in December 2019 and later do not have to pay the real estate transfer tax.

Based on the bill, the time test for exemption regarding the sale of real estate (residential but not intended for own use) from personal income tax will be extended from five to ten years. The extension of the time test will be effective for real estate acquired after 1 January 2021 (the time test for exemption from personal income tax regarding the sale of real estate intended for permanent residence stays the same, i.e. 2 years).

The bill also reduces the amount of deduction of interest included in a mortgage contract as an item deductible from the tax base. The original amount of CZK 300,000 was reduced to CZK 150,000 and it applies to mortgages concluded after 1 January 2022. The amount of CZK 300,000 still applies to mortgages concluded before 1 January 2020 and also to their potential later re-financing.