What type of taxes are paid when buying real estate.
The real estate transfer tax was abolished by Act No. 386/2020 Coll., repealing Senate Legislative Measure No. 340/2013 Coll., on Real Estate Acquisition Tax, as amended, and amending and repealing other related legal regulations. This means that in the case of purchase, i.e. in the case of the acquisition of ownership of real estate for consideration, the real estate acquisition tax is not paid.
What type of taxes should you pay when selling assets, including capital gains.
Income taxes are regulated by Act No. 586/1992 Coll., on Income Taxes, as amended.
Taxation of income from the sale of real estate
Income from the sale of real estate outside business assets that is not exempt from tax is taxed as part of other income.
Exemption of income from the sale of a family house and related land or a unit that does not include non-residential premises other than a garage, cellar or storage room, and related land, can be applied if the seller has lived there for at least two years immediately before the sale or for a shorter period of time if the seller uses the funds obtained to procure his own housing needs. Exemption of income from the sale of real estate in other cases can only be applied on the condition that the period between acquisition and sale exceeds 10 years, or a shorter period if the taxpayer uses the proceeds of the sale to provide for his own housing needs. The exception is the case when it is a sale of real estate acquired by inheritance from a deceased person who was a relative in the direct line of descent or a spouse. Here, the period of 10 years is reduced by the period during which the property was demonstrably owned by the decedent.
Taxation of income from the transfer of securities for consideration
Income from the transfer of securities for consideration outside business assets that is not exempt from tax is taxed as part of other income.
Income from the transfer of securities for consideration and income from shares attributable to a unit certificate on the dissolution of a mutual fund are exempt from tax depending on the amount (up to CZK 100,000) or the holding period (3 years; in the case of a share certificate, the period is 5 years). If the aggregate of all income from the transfer for consideration of a share in a business corporation and income from the transfer for consideration of a security exempt from income tax (in the case of securities due to the holding period, i.e. 3 years) exceeds CZK 40,000,000 in a taxable period, such income is not exempt from tax in a proportion calculated according to the proportion of the portion of the aggregate of such income exceeding CZK 40,000,000 and the aggregate of such income.
If a taxpayer obtains income that is exempt from personal income tax and exceeds the amount of CZK 5,000,000, he is obliged to notify the tax administrator of this fact by the end of the deadline for filing a tax return for the tax period in which the income was received.
What type of taxes are paid in connection with the ownership of real estate.
In connection with the ownership of real estate, real estate tax (annual property tax) is paid.
Basic information on real estate tax
Real estate tax is regulated by Act No. 338/1992 Coll., on Real Estate Tax, as amended, and includes tax consisting ofland tax and tax on buildings and units.
Real estate tax is determined for the tax period according to the situation as of 1 January of the year for which the tax is assessed. Tax Period is the calendar year. Changes in facts that occur during the taxable period are not taken into account.
Exemption from real estate tax may includeapplies e.g. to land, and taxable buildingsbuildings and taxable units owned by the state, municipalities, regions; on, land, and buildingsbuildings and taxable units, which together form one functional unit and which serve as cultural institutions, schools, health care facilities, social care facilities; real estate owned by public public research institutions, immovable property used to improve the environment, dams, wastewater treatment plants, taxable buildings or taxable units of the energy and gas distribution system; Real estate used for public Transport; land and buildings of taxable buildings in government-approved preferential industrial zones under the Investment Incentives Act.
Tax return
The taxpayer is obliged to file the tax return by 31 January of the tax period with the locally competent tax administrator, i.e. the tax office in whose territorial jurisdiction the real estate that is subject to real estate tax is located. If the annual real estate tax does not exceed CZK 5000, it is payable at once, no later than 31 May of the current tax period. If the total real estate tax is higher than CZK 5,000 or the taxpayer operates agricultural production, it is payable in two equal instalments.
Groups of land, buildings and units
All real estate is divided into groups, namely groups of land and groups of buildings and units. The tax rate is linked to individual groups.
Tax calculation
Real estate tax is the sum of land tax and tax on buildings and units. Tax is calculated as the product of the tax base and the tax rate. For some land, taxable buildings and taxable units, the tax rate is multiplied by a coefficient according to the number of inhabitants in the municipality in the amount of 1.0 to 4.5, which can still be increased by one category (up to 5) based on the municipality's decision. The municipality may also set a local coefficient of 0.5 to 5.0 (for groups of selected agricultural land, permanent grassland or unusable other areas only in the amount of 0.5 to 1.5), which is multiplied by the calculated tax.
Land tax
Taxpayer
In most cases, the taxpayer is the owner of the land. In special cases, the taxpayer is the tenant, tenant or user. The taxpayer is also a trust fund, a mutual fund, or a fund managed by a pension company or a builder if it is land encumbered by the right to build.
Subject of tax
The subject of the tax is land in the Czech Republic registered in the Land Registry. These plots are divided into several types (e.g. agricultural land, commercial forests, forest lands, water areas and ponds, building plots, paved areas of land, built-up areas and courtyards, and other areas of land).
Excluded from taxation are, for example, land under taxable buildings, water areas, protective forests or forests of special purpose, land used for the defence of the state.
Tax base
The determination of the tax base is based mainly on the type of land registered in the Land Registry. In the case of agricultural land, the tax base is the price of land determined by multiplying the actual area of land in m2 by the average price of land determined at 1 m2 according to the relevant legal regulation. In the case of forest land and production ponds, the tax base is the price of the land determined according to the relevant legal regulation or using a fixed tax rate per square meter, the product of the actual area of the land in m2 determined as of 1 January of the tax period and the amount of CZK 3.80. For other land, the tax base is the actual area of the land in m2 determined as of 1 January of the tax period.
Tax rate
In the case of land included in a group of selected agricultural land, permanent grassland and forest land, the tax rate is expressed as a percentage (0.45% or 1.35%). In the case of other plots of land classified into individual groups, the tax rate for each 1 m2 ranges from CZK 0.08 to CZK 9.00. In the case of other plots of land classified into individual groups, the tax rate for each 1 m2 ranges from CZK 0.08 to CZK 9.00. The tax rate for building land is multiplied by a coefficient according to the number of inhabitants in the amount of 1.0 to 4.5, which the municipality can increase by one more category.
Tax on buildings and units
Taxpayer
The taxpayer of the tax on buildings and units is usually the owner of the taxable building or taxable unit. The taxpayer is also a trust fund, mutual fund or fund managed by a pension company. In specified cases, the taxpayer is the lessee, tenant or user.
Subject of tax
The subject of the tax on buildings and units is a taxable building, which for the purposes of real estate tax means a completed or used building according to the Cadastral Act and a completed or used engineering structure explicitly listed in the Annex to the Real Estate Tax Act. The subject of tax is also a completed or used unit (apartment, non-residential space) registered in the Land Registry.
The subject of the tax on buildings and units is not a taxable building in which there are taxable units, because they are taxed separately.
Tax base
The tax base for taxable buildings, i.e. buildings and engineering structures, is the area of the built-up area of the taxable building in m²; for taxable units, their adjusted floor area in m2 (multiplied by a coefficient of 1.20 or 1.22), depending on the situation as of 1 January of the tax period.
Tax rate
The basic rates are set in the range of CZK 3.50 to CZK 18 per 1 m² of built-up area of a taxable building or adjusted floor area of a taxable unit. The basic tax rate for a taxable building increases by CZK 1.40 for each additional above-ground floor. For taxable buildings included in the group of residential buildings and taxable units included in the group of other taxable units, the tax rate is multiplied by a coefficient according to the number of inhabitants in the amount from 1.0 to 4.5, which the municipality can increase by one more category.