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A good time to buy property? Now!

3,2,1... Now is the ideal time for buying property

Linda Veselá
17.Sep 2020
+ Add on Seznam.cz
2 minutes to read
Realitní makléřka ukazuje luxusní dům

Have you been planning to buy a property for a long time and are you waiting for the right moment? The best moment probably came right now! The parliament okayed a definitive farewell to the property acquisition tax.

The property acquisition tax comes up to four percent and is paid by the buyer. When buying a property for several million crowns, these are definitely not negligible amounts, which, moreover, cannot be paid with funds drawn from a mortgage. The Minister of Finance, Alena Schillerová, has described the tax as unfair several times in the past, and the Senate later took a similar position. On Tuesday evening, deputies voted to cancel it.

The law was supported by 91 of the 93 deputies present and the only thing left now is for it to be signed by President Miloš Zeman.

Prodej luxusního mezonetového bytu na Praze 8
Prodej luxusního mezonetového bytu na Praze 8, Praha 8

The difference will be clear. Especially for more expensive properties

According to the founder of Y&T Luxury Property Elena Jakubovič, the abolition of the acquisition tax will mainly affect the sale of more expensive properties, for which the difference will really be clear:

"Such properties are mostly acquired for housing purposes and will definitely makes waves on the real estate market in this area."

On the contrary, the measure will not bring any relief to individuals who own Airbnb.

"Indebtedness and the belief that tourists will not return to the Czech Republic in large numbers will continue to dump the prices of long-term rentals,"

assumes Jakubovič. According to her, the rest of the year that awaits us will be challenging.

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Mgr. Elena Jakubovič MBA - zakladatelka Y&T Luxury Property
Mgr. Elena Jakubovič MBA - zakladatelka Y&T Luxury PropertySource: Y&T Luxury Property YTPI.cz

How will the amendment work?

The approved amendment has retroactive effect - the tax will expire retroactively to 31 March this year.

And how will it work in practice? People who have to file their taxes due to the pandemic by the end of December will no longer pay the tax. Those who have already paid it will receive it back from the authorities as a refundable overpaid amount. The measure thus concerns people who completed their cadastre registration in December 2019 or later.

There are more changes!

However, the amendment also brings other changes - it also extends the so-called time test from 5 to 10 years for owners. Therefore, if a person sells their property, which they do not use for their own housing, within 10 years of its acquisition, they must pay income tax on it. The measure will take effect at the beginning of next year.

From next year, the limit on the deduction of mortgage interest from the income tax base is also halved, to 150,000. The limit thus remains in full only until the end of the year!

Luxusní vila s bazénem na prodej - Praha západ
Luxusní vila s bazénem na prodej - Praha západ, Okolí Prahy

What's best? Buy real estate by the end of the year

According to Jakubovič, those who have been deciding on the purchase of real estate since the beginning of the year should move fast!

"The supply on the market is not unlimited, and you know very well that a lot of offices weren't open during quarantine, which resulted in delays of building permits,"

she explained.

And how do deputies react to the amendment? Most welcomed it with enthusiasm.

"We have been striving for this for a long time, because both proposals (abolition of the property acquisition tax and maintenance of tax deductions, ed. Note) will help all people who want to buy their own housing. Owning a home is one of the basic securities of life and the state should create the conditions for its acquisition,"

ODS deputy Vojtěch Munzar, told LP-life.com.

ODS chairman Petr Fiala also expressed his joy on social media:

"The effort paid off. After a few years, we won the abolishing of the property acquisition tax from the opposition. With today's apartment prices, people had to give a lot of money to the state. Now they can keep the money and they can maybe partially furnish the apartment for it."

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