Real estate expert Elena Jakubovič: Abolition of real estate tax - Wait or sell?

Life is about to get more complicated for Airbnb apartment owners
17.Sep 2020
 
Homepage New articles

The Chamber of Deputies has finally confirmed the abolition of real estate acquisition tax, which shall cease to exist retroactively as of March. This tax had, in the past, replaced transfer tax, ammounts to four percent and is paid by the buyer. Elena Jakubovič, real estate expert and founder of Y&T Luxury Property, explains in an interview what to expect from this change and how it will be reflected in real estate prices. She believes that one shouldn't unnecessarily hesitate about making a purchase. And she also has a hot tip on what to invest in if you have free money at your disposal.

How do you perceive the abolition of real estate acquisition tax? Do you think this is good news?

Good news? It depends for whom. If you bought a property in October or November 2019, you probably won't feel too excited about it, because it applies to transfers approved by the cadastral office since December 2019. Today's real estate market can be easily compared with fashion boutiques and pubs, which had been left empty during quarantine, and after the lifting of the emergency, crowds of buyers took them by storm. People were trying to take their mind off the situation - buy something nice for themselves and get out of the house. The real estate quarantine will follow the same pattern. Buyers have been waiting to purchase real estate since the end of 2019 and now they'll start buying like crazy.

If the abolition is signed by the president and actually enters into force, what does this really mean for the buyer?

Four percent is a very noticeable difference for more expensive real estate over 20 million crowns, which most people buy as their own buy. Buyers of cheaper flats would also see the change as positive, if they weren't afraid that they could lose their jobs any time. Next to tourism and hospitality, the wave of redundancies can already be felt in administrative, marketing or in HR positions. If banks continue to provide blanket mortgages after COVID-19 programs end, the chances of a positive impact of tax abolition will be greater.

Byt na prodej Smíchov - Praha 5 - 66m
Byt na prodej Smíchov - Praha 5 - 66m, Praha 5

Will the cancellation also affect the owners?

It will mainly complicate the lives of AirBnb apartment owners, who have had quite a demanding period and can no longer wait for the normalization of tourism. I think it is more than obvious that the occupancy by tourists will not increase any time soon. The strategy of renting Airbnb apartments for 3 to 4 months at a reduced/partial rent didn't work either. The chaos caused at the market with both short-term and long-term leases will result in a much larger Airbnb crisis in the autumn of this year.

The trend of short-term leases began 3 to 4 years ago. Over the last two years, the owners of Airbnb flats have been buying more and more real estate, hoping to sell them tax-exempt after 5 years. However, for many flats this deadline has not yet expired. And financial problems are apparent. The question is whether they can afford to wait 10 years for a possible sale under the current circumstances. Airbnb apartment owners who have owned the property for more than 5 years and believed that they were safe and could sell at any time lucked out, too.

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

The new law stipulates: "The extension (exemption from income tax from 5 to 10 years, ed. note) will apply to cases where the real estate will be acquired since 1 January 2021. In this case, the acquisition of the right of ownership will therefore be decisive (submission of a proposal for registration in the cadastre of real estates), not the approval of this registration." This means that, if the proposal for the registration of ownership rights is submitted in December 2020 and registered only in 2021, for example on the basis of a purchase contract, then the 5-year time test will continue to apply to the purchasing natural person. It looks like in December 2020, there will be more traffic in the real estate cadastre than in all Prague bars after the ban is lifted. (laughter)

What dates should those interested in buying real estate keep an eye on and when will everything enter in force? There are various dates in play, some of them retroactive...

The abolition of the acquisition tax applies, for both citizens and companies, retroactively to transfers approved by the cadastral office from December 2019 and subsequently. That means that the registration in the cadastre of real estates was issued after 1 December 2019 and the tax due was determined by 31 March 2020 at the latest.

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

Should people wait with the purchase of real estate?

You definitely shouldn't wait if you have a pre-approved loan, if you have selected a property or if you know that, for example due to family circumstances, you'll definitely make the purchase next year. My advice is to buy now. In my opinion, we will see a shortage of real estate on the market as soon as next year.

Delays in proceedings at construction offices, a shortage of labor in the construction industry and the consequent rise in construction work prices have all caused new delays. Developers will be postponing their projects, waiting for more favorable construction conditions. Due to the lack of real estate, prices could rise again. This is a prediction that I repeat in every conversation I have.

How will tax abolition affect mortgages?

Unfortunately, some banks are already refusing to provide loans with property guarantee under the claim of having significantly exhausted their financial resources. Let's not forget that the whole Airbnb panic, the dumping prices on the long-term rental market, all caused a decline in the value of real estate. In both comparative and yield estimation methods.

There are also lower tax deductions that buyers may not like. According to the new law, natural persons (employees and self-employed people, Ed. note) can deduct only CZK 150,000 from the tax base for a mortgage loan, instead of CZK 300,000, as was the case before. This can in fact make a difference of approximately CZK 22,500 per year, or CZK 45,000 in case of Airbnb apartments with a difference of 15% from CZK 300,000).

Luxusní rodinný dům Praha 6 - Ořechovka
Luxusní rodinný dům Praha 6 - Ořechovka, Praha 6

How will the decision to abolish this tax affect the prices of luxury real estate in the Czech Republic? And how will it affect prices in Prague?

Despite the pandemic, luxury property prices rose by around 4% in 2020. Real estate has once again proven to be a much more stable deposit of money than stocks or gold. I think that by the end of 2020, the growth of prices of more luxurious real estate will be modest, but in 2021 we expect an increase of another 8 to 11%. For 1-bedroom, 2-bedroom apartments, not only in Prague 1, the prices will fall much more significantly. So the sooner the owners start selling, the better.

What properties do you recommend investing in within Y&T Luxury Property now? Do you have a personal tip?

For investors who already have their own money ready, I would definitely recommend investing in smaller apartments, which we are preparing to list. It will allow them to acquire an interesting portfolio in the center of Prague. And once the coronavirus situation is over and the market stabilizes, prices of these apartments can be expected to rise again. So in the long run, it can be a very profitable investment.

We do not sell sunset, but we are experts at what we do!

Obchodní tým Y&T Luxury Property • Source: Y&T Luxury Property YTPI.cz

Luxury Prague Life

Share / become a fan

Y&T Luxury Property

Photo gallery (0)

View photo gallery

About the author

David Budai
Y&T Luxury Property Prague Czech Republic s.r.o.
Myslíkova 245/3, 110 00 Prague 1, Czech Republic
info@ytpi.cz
+420 224 282 506
Luxury Real Estates
Luxusní vila na prodej - Praha - západ - 632m
Okolí Prahy

Luxusní vila na prodej - Praha - západ - 632m

6 + KK 632 m²
price upon request
Show property
Luxusní vila na prodej Praha 6 - Hanspaulka
Praha 6

Luxusní vila na prodej Praha 6 - Hanspaulka

7 + KK 527 m²
125 000 000 CZK
Show property
Luxusní byt na prodej - Praha 6 - Podbaba
Praha 6

Luxusní byt na prodej - Praha 6 - Podbaba

5 + KK 426 m², ter. 250 m²
price upon request
Show property
Luxusní vila na prodej v Šáreckém údolí
Praha 6

Luxusní vila na prodej v Šáreckém údolí

7 + 2 440 m², bal. 5 m²
price upon request
Show property
Luxusní rodinný dům Praha 6 - Ořechovka
Praha 6

Luxusní rodinný dům Praha 6 - Ořechovka

5 + 1 246 m²
price upon request
Show property
Luxusní penthaus na Praze 1 - 226m
Praha 1

Luxusní penthaus na Praze 1 - 226m

4 + 1 226 m², bal. 7 m², ter. 24 m²
price upon request
Show property
Luxusní vila s bazénem na prodej - Praha západ
Okolí Prahy

Luxusní vila s bazénem na prodej - Praha západ

6 + KK 812 m², ter. 22 m²
63 800 000 CZK
Show property
Luxusní byt se zahradou na Praze 8 - 346m
Praha 8

Luxusní byt se zahradou na Praze 8 - 346m

4 + KK 146 m², ter. 27 m²
19 300 000 CZK
Show property
Luxusní dům na prodej se zahradou a bazénem
Praha 9

Luxusní dům na prodej se zahradou a bazénem

3 + KK 121 m²
price upon request
Show property
Prodej luxusního bytu s terasou - Praha 4
Praha 4

Prodej luxusního bytu s terasou - Praha 4

1 + KK 55 m², ter. 12 m²
price upon request
Show property
Luxusní byt na prodej Praha - 320m
Praha 5

Luxusní byt na prodej Praha - 320m

5 + KK 320 m², bal. 4 m², ter. 38 m²
price upon request
Show property
Byt na prodej v historickém paláci - Praha 1
Praha 1

Byt na prodej v historickém paláci - Praha 1

5 + 1 143 m²
price upon request
Show property
Penthouse s výhledem na Hrad na prodej - 251m
Praha 1

Penthouse s výhledem na Hrad na prodej - 251m

4 + KK 288 m², ter. 37 m²
price upon request
Show property
Byt na prodej Praha 1 - Staré Město - 125m
Praha 1

Byt na prodej Praha 1 - Staré Město - 125m

3 + KK 125 m²
price upon request
Show property
Luxusní byt k prodeji - Praha 5 - 93m
Praha 5

Luxusní byt k prodeji - Praha 5 - 93m

3 + KK 93 m², ter. 11 m²
11 228 000 CZK
Show property
Penthouse Troja 309m
Praha 7

Penthouse Troja 309m

5 + KK 309 m², ter. 52 m²
price upon request
Show property
Luxusní vila na prodej 620 m2 - Praha
Praha 6

Luxusní vila na prodej 620 m2 - Praha

Atypický 620 m²
price upon request
Show property
Luxusní kancelář na prodej Praha 1 - Staré
Praha 1

Luxusní kancelář na prodej Praha 1 - Staré

4 + KK 229 m²
price upon request
Show property
Byt na prodej Smetanovo nábřeží 235m
Praha 1

Byt na prodej Smetanovo nábřeží 235m

5 + KK 235 m²
79 000 000 CZK
Show property
Prodej luxusní kancelářské budovy v okolí
Praha 9

Prodej luxusní kancelářské budovy v okolí

5 + 2 1173 m²
price upon request
Show property
Vila na prodej Praha 6 - 277m
Praha 6

Vila na prodej Praha 6 - 277m

7 + 1 277 m²
20 000 000 CZK
Show property
Luxusní byt s terasou Troja 152m
Praha 7

Luxusní byt s terasou Troja 152m

2 + KK 152 m²
31 800 000 CZK
Show property
Obchodní prostor na prodej na Praze 8 - Karlín
Praha 8

Obchodní prostor na prodej na Praze 8 - Karlín

Atypický 489 m², ter. 211 m²
price upon request
Show property
Prodej luxusního mezonetového bytu na Praze 8
Praha 8

Prodej luxusního mezonetového bytu na Praze 8

3 + KK 188 m², ter. 45 m²
price upon request
Show property
Byt Smetanovo nábřeží 191m
Praha 1

Byt Smetanovo nábřeží 191m

4 + KK 191 m², bal. 3 m²
price upon request
Show property
Prodej luxusní vily v okolí Prahy
Praha 9

Prodej luxusní vily v okolí Prahy

5 + 2 1173 m²
price upon request
Show property
Luxusní penthouse k pronájmu s výhledem
Praha 2

Luxusní penthouse k pronájmu s výhledem

6 + KK 600 m², ter. 200 m²
price upon request
Show property
Restaurace na pronájem Troja - 397m
Praha 7

Restaurace na pronájem Troja - 397m

Atypický 397 m², ter. 37 m²
price upon request
Show property
Vila na prodej Praha 4 - Braník
Praha 4

Vila na prodej Praha 4 - Braník

Atypický 273 m², ter. 21 m²
price upon request
Show property
Luxusní byt na prodej Praha 8 - 113m
Praha 8

Luxusní byt na prodej Praha 8 - 113m

4 + KK 113 m²
19 300 000 CZK
Show property
Luxusní byt na pronájem Nové Město - 117m
Praha 1

Luxusní byt na pronájem Nové Město - 117m

3 + 1 117 m²
price upon request
Show property
Luxusní byt na prodej - Praha 5 - Smíchov
Praha 5

Luxusní byt na prodej - Praha 5 - Smíchov

4 + KK 185 m², ter. 50 m²
21 290 000 CZK
Show property
Luxusní byt na prodej Praha 1 - Staré Město
Praha 1

Luxusní byt na prodej Praha 1 - Staré Město

5 + 1 278 m²
price upon request
Show property
Pronájem luxusního bytu Vyšehrad
Praha 2

Pronájem luxusního bytu Vyšehrad

4 + 1 180 m²
120 000 CZK
Show property
Byt k pronájmu Praha 1 - Nové Město - 66m
Praha 1

Byt k pronájmu Praha 1 - Nové Město - 66m

1 + KK 66 m², ter. 19 m²
18 000 CZK
Show property
Luxusní penthouse Troja 550m
Praha 7

Luxusní penthouse Troja 550m

Atypický 550 m², bal. 4 m², ter. 9 m²
price upon request
Show property
Luxusní byt na prodej na Praze 5 -115m
Praha 5

Luxusní byt na prodej na Praze 5 -115m

3 + KK 115 m²
price upon request
Show property
Vila na prodej s luxusním pozemkem v Praze
Praha 4

Vila na prodej s luxusním pozemkem v Praze

Atypický 458 m²
price upon request
Show property
Luxusní byt k pronájmu s výhledem na Vyšehrad
Praha 2

Luxusní byt k pronájmu s výhledem na Vyšehrad

3 + KK 130 m², bal. 1 m²
65 000 CZK
Show property
Pronájem bytu na Praze 1-75m
Praha 1

Pronájem bytu na Praze 1-75m

3 + KK 75 m²
price upon request
Show property
Luxusní kanceláře na pronájem Praha 5 - 778m
Praha 5

Luxusní kanceláře na pronájem Praha 5 - 778m

Atypický 778 m²
250 000 CZK
Show property
Byt na pronájem - Praha 3 - 72m
Praha 3

Byt na pronájem - Praha 3 - 72m

2 + KK 80 m², bal. 8 m²
22 000 CZK
Show property
Prodej luxusního bytu Praha 4 - 62m
Praha 4

Prodej luxusního bytu Praha 4 - 62m

1 + KK 62 m², ter. 13 m²
price upon request
Show property
Luxusní kancelářské prostory na prodej 620
Praha 6

Luxusní kancelářské prostory na prodej 620

Atypický 620 m²
price upon request
Show property
Luxusní kancelář Troja 415m
Praha 7

Luxusní kancelář Troja 415m

Atypický 415 m², bal. 4 m², ter. 9 m²
price upon request
Show property
Byt s historickými prvky - Praha 1 - Malá
Praha 1

Byt s historickými prvky - Praha 1 - Malá

3 + 1 113 m²
price upon request
Show property
Luxusní vila na prodej - 393m
Okolí Prahy

Luxusní vila na prodej - 393m

10 + 2 393 m²
price upon request
Show property
Luxusní byt s terasou Praha 1 - 321m
Praha 1

Luxusní byt s terasou Praha 1 - 321m

4 + KK 321 m², ter. 144 m²
41 928 000 CZK
Show property
Byt na pronájem Nové Město - Praha 1 - 72m
Praha 1

Byt na pronájem Nové Město - Praha 1 - 72m

2 + KK 74 m², bal. 2 m²
26 000 CZK
Show property
Luxusní byt s výhledem na hrad Smetanovo
Praha 1

Luxusní byt s výhledem na hrad Smetanovo

2 + KK 106 m²
100 000 CZK
Show property
Byt na pronájem Praha 1 - 105m
Praha 1

Byt na pronájem Praha 1 - 105m

3 + 1 105 m²
50 000 CZK
Show property
Byt na pronájem s terasou Praha 1 - 202m
Praha 1

Byt na pronájem s terasou Praha 1 - 202m

5 + 1 202 m², ter. 13 m²
90 000 CZK
Show property
Luxusní byt po rekonstrukci Praha 1 - 42m
Praha 1

Luxusní byt po rekonstrukci Praha 1 - 42m

2 + KK 42 m²
9 177 000 CZK
Show property
Mezonetový byt na pronájem Praha - Nové Město
Praha 1

Mezonetový byt na pronájem Praha - Nové Město

1 + KK 46 m²
22 000 CZK
Show property
Pronájem luxusního bytu Vyšehrad
Praha 2

Pronájem luxusního bytu Vyšehrad

3 + KK 130 m²
60 000 CZK
Show property
Byt na pronájem Praha 1 - 86m
Praha 1

Byt na pronájem Praha 1 - 86m

2 + KK 86 m², bal. 3 m²
Reserved
Show property
Supermakléřky - real estate comics