In Which Cases Do You Not Pay the Real Estate Acquisition Tax?

In Which Cases Do You Not Pay the Real Estate Acquisition Tax?

Since November 2016, the buyer (acquirer) has been required to pay the real estate acquisition tax. Before this date, the obligation was on the seller. The tax is always paid on the higher amount — comparing the price stated in the purchase contract and 75% of the value determined by the expert valuation report. For example, for a standard Prague apartment (2+kk, 50 m²) with a purchase price of CZK 4,000,000, the buyer must pay CZK 160,000 to the Financial Office.

Exemption for the First Paid Acquisition of a Property

In certain cases, the buyer is exempt from paying the tax. The most common example is the first paid acquisition of a completed residential building or apartment unit in an apartment building. However, the property must be fully completed — if you purchase an unfinished property, you are still required to pay the tax. The sale must also occur within five years of completion or initial occupancy. The exemption does not apply to the acquisition of an entire apartment building.

According to the new Civil Code (§3054), a building is considered part of the land. However, in the case of family houses, additional parcels — such as garden plots — often form part of the functional whole with the house. These associated plots (e.g., gardens) are not exempt from the real estate acquisition tax and are therefore subject to the standard 4% rate.

It is the responsibility of both the seller and the buyer to sign a purchase agreement clearly specifying the value of any land (e.g., a garden) not built upon by the house itself.

As for non-residential premises, only garages, cellars, and storage rooms used jointly with the apartment are exempt from the tax.

If you are not eligible for exemption, you must pay the tax no later than the end of the third calendar monthfollowing the month in which the ownership transfer was registered in the Land Registry.

For more detailed information, refer to Senate Legislative Measure No. 340/2013 Coll., on the Real Estate Acquisition Tax (§7, paragraph 1), or contact our team at www.POSUDEKPRAHA.cz.