Income tax on real estate sales - where you really need to pay and when you you are exempt from tax

If you sold an apartment, a house or a plot, this is most likely to be reflected in your tax.

Income tax is defined by Act No. 586/1992 Coll. about income taxes. The subject of this tax is:

  • § 6 – Income from employment (employment)
  • § 7 – income from self-employment (business)
  • § 8 – income from capital assets
  • § 9 – rental income
  • § 10 – other earnings

Proceeds from the sale of property fall into the category of other income. In this case, the rate of tax is 15% of the selling price after deducting all eligible costs.

As an eligible cost, the original property price can be applied, so the tax is only paid on the price difference, not on the total price. This price may be the amount of the purchase contract or expert judgment (on the date of acquisition) if the property was inherited or donated. All eligible expenditure can be included in the costs. These may be reconstruction costs, donation taxes and sales related costs (such as stamps, legal services, real estate commissions, ...)

Given that as of 1 January 2014 income tax includes both inheritance tax and gift tax. It also affects your tax liability even if you receive income in non-cash form. The price is then determined by an assessment. In the area of donation and inheritance, however, there is a broad range of tax exemptions.​


1 / Ownership of real estate for at least 5 years

You will not have to pay the real estate tax if you own the sold property for more than 5 years. It is even counted when someone in your family owned you and you acquired the inheritance in a straight line.


2 / Residence in real estate for at least 2 years​

Revenue from the sale of the property is exempt from tax if the seller or owner resided (or had a residence) for at least two years immediately prior to sale in the house or flat. If the property is in the common property of the spouses, it is sufficient if at least one of the spouses has fulfilled this condition. For entrepreneurs, it is true that the property for the duration of the relevant 2 or 5 year period may not be included in its tangible property.​

In this case, there are two main concepts of liberalization - immediately before the sale and residence

Residence - permanent residence is not a condition. However, it must be shown that the person in question really lived there. It is sufficient to prove, for example, that correspondence (bank statements, energy bills, etc.) has been delivered here.

Immediately prior to sale - does not mean that you have to stay in the property until it is sold. If you move out before selling to make the house available for viewing during a tour, this condition is still met. On the other hand, if you moved away and the property was leased for a while between the sale, it is unlikely that you will be able to fulfill this condition.


3 / Purchase of other properties​

Income from sales is exempt from income tax if it is used in the period of one year before one year after sale to satisfy residential needs.


4 / Heritage and donation​

When you sell real estate that you acquired as a successor in the estate of a relative who was a relative in a direct line or a spouse, the five-year time shift is shortened by the dib that the testator or property testator possesses. Relatives in a direct line define the Civil Code in Section 117.​
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