Selling a property in the Czech Republic? Whether you’re selling your own home or an investment property, the tax rules differ significantly. Understanding these rules in advance can save you money and prevent unpleasant surprises.
How Long Do You Need to Own the Property to Avoid Tax?
The length of ownership is a key factor in determining whether you pay income tax on the sale.
- Properties acquired before December 31, 2020 → Tax-free after 5 years of ownership
- Properties acquired after January 1, 2021 → Tax-free after 10 years of ownership
- Personal residence exemption → If you have lived in the property for at least 2 years before selling, you are automatically exempt from tax, even if you have owned it for a shorter time.
- Investment properties → You can only claim tax exemption after 10 years of ownership.
Important note: If you sell an investment property before the 10-year period, be prepared to pay 15% income tax on the profit.
Tax Exemption When Reinvesting the Profit
If you’re selling a personal residence, you don’t need to worry about reinvesting the money – your profit is automatically tax-free (if the above conditions are met).
However, if you sell an investment property, you might still be able to avoid tax if you reinvest the proceeds into a new home for personal use.
Conditions for tax exemption:
- The funds must be used within 1 year before or after the sale.
- You need to prove the purpose (e.g., provide a purchase contract).
- If you don’t reinvest the full amount, you will pay tax on the remaining profit.
Example: If you sell an investment property for 5,000,000 CZK and only use 3,000,000 CZK to buy a new home, you must pay 15% tax on the remaining 2,000,000 CZK.
Selling a Business Property? Different Rules Apply!
If the property was part of your business assets, standard tax exemptions do not apply.
What does this mean?
- The profit is taxed as business income (15–23%).
- You must also pay social and health insurance contributions.
If you’re a self-employed person or company owner, consult a tax advisor to ensure proper reporting.
Do You Need to Inform the Tax Office?
Yes – if you plan to reinvest the proceeds into your new home to claim tax exemption, you must notify the Czech Tax Authority.
Deadline: By the end of the tax return period for the year in which you sold the property.
What Qualifies as “Personal Housing Needs”?
For tax exemption, the new property must serve as your primary residence (or for close family members, such as a spouse or children).
It cannot be an investment property intended for renting or resale.
Comparison Table: Personal Use vs. Investment Property
Thinking of Selling Your Property?
Every case is unique – and the tax rules can be tricky. If you’re unsure how the sale of your property will impact your taxes, we highly recommend consulting a professional to avoid unexpected costs.