Government Proposal to Abolish Real Estate Acquisition Tax Submitted to Chamber of Deputies
We would like to inform you that on 13 May 2020, the government submitted a draft bill to the Chamber of Deputies, which, among other things, repeals the Senate's statutory measure No. 340/2013 Coll. and related real estate acquisition tax legislation. If this Act is approved, tax on the acquisition of real estate in the Czech Republic will be abolished retroactively for all entries of real estate transfers registered in the Real Estate Cadastre from 1 December 2019, i.e. for those entries for which the obligation to file a tax return for real estate acquisition tax and to pay real estate acquisition tax to the buyer arose on 31 March 2020 and later.
The draft law also includes an amendment to Act No. 586/1992 Coll., on Income Taxes, which would implement two fundamental changes in the area of personal income tax, in particular:
- to abolish the possibility to deduct from the personal income tax base interest paid on a mortgage to secure the payer's own housing needs, for real estate acquired from 1 January 2022.
- to extend the time exemption test for natural persons from five years to ten for income from the sale of real estate that is not intended for own living. This would apply to any such real estate acquired from the date of entry into force of this Act.
The draft bill is expected to be discussed by the Chamber of Deputies at their next plenary session, which begins on 26 May 2020.