When you are buying or renting a property, whether residential or commercial, it is best to have thorough working knowledge of the current situation in the Czech real estate market. Svoboda & Williams is here to help you navigate the acquisition or rental process and everything this entails, including its legal aspects, current market development, and financing options. We have a wealth of expertise and a team of professionals who follow the real estate situation closely and know everything there is to know about it. In addition, we regularly expand our know-how by conducting our own surveys, and so we can competently evaluate today’s trends and predict future ones.
Useful information about the Czech real estate market:
Real estate tax:
All property in the Czech Republic is subject to an annual nominal property tax. Its amount is determined by the type of property, the total floor and/or land area, and the location. The tax must be paid by anyone who acquired property in the previous fiscal year, whether it was bought, given as a gift, or inherited. It also applies to cases when the owner significantly changes the parameters of the property, especially through extensions, conversions, changes in the nature of the plot, etc.
Property Acquisition Tax:
The property acquisition tax was abolished on September 26th, 2020 with retrospective effect from December 1st, 2019. Therefore, the acquisition of real estate that was registered into the Land Registry from December 2019 onwards is not subject to tax. Buyers who acquired property after this date and have paid this tax are entitled to a refund. The refund application form should be sent to the relevant tax administrator in writing or electronically.
A 15% income tax is paid from the income gained by selling a property held in ownership for less than two years if the owner in question lives in it. The time test for the exemption from this tax concerning the sale of investment real estate, i.e. property in which the owner doesn’t live, has been extended from five to ten years for real estate acquired after January 1st, 2021. If the funds have been used for one’s own housing needs, the law provides for certain exemptions. Gains from renting property owned by natural persons are also subject to the 15% income tax. If the property is owned by a company and produces a profit, this profit is taxed at 19%.
VAT on Sales (New Buildings and New Apartments)
This tax applies to new buildings and new apartments. The sale of properties not older than five years is subject to a VAT of 21% of the purchase price, with the exception of buildings intended for social housing. These are subject to a reduced 15% VAT rate. Social housing construction criteria are met by apartments with a total floor area of less than 120 sq. m., and family houses with a total floor area of less than 350 sq. m.
Only payers of VAT must pay the VAT on the sale of a property.
Services for Foreigners in Prague
Our agency will be glad to tailor relocation packages to suit you, including filing applications for work permits, customs clearance, etc. We familiarize newcomers with Prague and its schools, neighborhoods, medical facilities, entertainment spots, and provide useful information to help you settle in your new home. We can also recommend housekeeping and babysitting services. For further information regarding Prague, please see our comprehensive guides: Svoboda & Williams Lifestyle, Prague Stay Lifestyle, and Feelhome All About Housing.
Setting up a Company
Our legal department will be glad to assist you. For further details, please see Legal Services for Foreigners.
Prague is divided into 15 districts. The Prague center includes Prague 1, 2, areas of Prague 7, and the Smichov riverbank area of Prague 5. This is the oldest, most charming part of Prague. Prague has an excellent public transportation network; for further information on its metro, trams, and buses, visit www.dpp.cz. Most visitors find that exploring the center on foot is the most rewarding way to get to know the city.
Areas of Particular Interest for Investors:
Prague 1 is the historic part of Prague. It spans the Vltava River and includes the Lesser Town, Old Town, Jewish Quarter, and the Prague Castle district. The world famous Charles Bridge and Old Town Square are in Prague 1.
Old Town is the center of historic Prague 1. The impeccable preservation of centuries-old architecture gives Old Town a fairytale-like atmosphere, complemented by many restaurants, sidewalk cafes, shops, businesses, cultural venues, and a vibrant nightlife.
The Jewish Quarter in Old Town is an architectural feast for the eyes, with block upon block of elegantly decorated Neo-Classical and Art Nouveau buildings displaying the wealth of past centuries. Five major synagogues, the historic Old Jewish Cemetery, and Prague’s most glamorous shopping street, Pařížská, are in the Jewish Quarter.
The Lesser Town is on the left bank of the Vltava River. Just below the Prague Castle, it is a romantic old neighborhood with picturesque buildings and narrow cobblestone streets winding up the hill towards the castle. The Lesser Town has a special peaceful atmosphere that you won’t find on the opposite bank of the river.
Hradčany is the charming neighborhood that surrounds the Prague Castle and overlooks the Lesser Town. In the past, Hradčany was part of the castle grounds.
Prague 2 has more of a residential character than Prague 1. Hence it is quieter, but lively nonetheless. Most of the buildings were built in the late 19th century and early 20th centuries.
Vinohrady is a residential neighborhood on a hill just behind the National Museum. It is only a short walk away from Old Town, but much less touristy. Most of the apartment buildings date back to the mid to late 19th and early 20th centuries (high ceilings, traditional lines, ornate facades, etc.).
New Town was founded by King Charles IV in the 14th century. It spreads eastward from the Vltava River and south of the National Theater. Partly in Prague 1 and mostly in Prague 2, New Town’s beautiful architecture from the late 19th and early 20th centuries boasts a more urban character than Vinohrady. Parts of New Town are quickly developing a unique atmosphere and are sometimes referred to as the Soho of Prague.
Prague 4 is one of the largest districts in the southern part of Prague stretching from the lower edge of the center to the city limits. The southern part of Prague 4 includes many small villages, residential neighborhoods, and open farmland. It is home to several major large retailers, shopping centers, and newly built modern office complexes.
Prague 5 starts at the bank of the Vltava River and stretches all the way to the western edge of the city. The district has a variety of villas, rows of terraced houses, and apartment buildings. Prague 5 also has several newly built shopping and office centers.
The riverbank area in Prague 1 & 2 and the northern sections of Prague 5 offers many attractive apartments built in the late 19th century and early 20th Neo-Classical and Art Nouveau styles. The properties offer breathtaking views of the river and Prague’s world famous architecture.
Prague 6 extends from Prague Castle to the city’s northwestern limits. It is primarily a residential area offering individual family homes with gardens. Most of the diplomatic community lives and works in Prague 6.