Real estate transfer tax
Written by: Halka Jaklová
Photo by: René Jakl
Would you like to know how and when
you are obligated to pay taxes on real estate transfers?
According to Law No. 357/1992 Coll., transfer against payment
for or change of ownership of real estate is subject to real estate
transfer tax. The financial office in whose district the transferred
real estate is located is the local relevant tax administrator
for filing a return for this tax. In general, the real estate transfer
taxpayer is the transferor (seller), who also files the tax return.
However, there are cases set forth in the law for which the transferee
is the payer. Besides transfers against payment for or change of
ownership of real estate, trading of real estate is also subject
to the real estate transfer tax. When real estate is traded, the
mutual real estate transfers are considered as a single transfer,
and the tax is paid on transfer of the real estate on which the
transfer tax is higher, and both parties to the exchange contract
pay the tax jointly.
The tax declaration must be submitted to the local relevant tax
administrator not later than by the end of the third month following
the month in which the transfer or exchange of the ownership occurs.
For the purposes of this tax immovable property, apartments, and
non-residential spaces are considered as real estate. Payers are
obligated to calculate the real estate transfer tax themselves,
to file the returns, and to pay the tax by the deadline for filing
the return. As a rule the return must be accompanied by an authenticated
duplicate copy of the contract or other document that confirms
or verifies the owner of the real estate (e.g., a purchase contract,
donation contract, exchange contract, agreement on the cancellation
and settlement of undivided co-ownership of the real estate), and
an expert appraisal of the price, determined as per a special legal
regulation (Law No. 151/1997 Coll.). This involves the price on
the date of the acquisition of the real estate, and in most cases
of real estate transfer it is also the tax base. The tax is calculated
at 3% of this base. In some cases the law stipulates that no expert
appraisal must be submitted, e.g., when the transfer or change
of ownership of the real estate that is tax-exempt. If the calculated
tax is less than CZK 100 it is not paid, but the return must be
filed anyway under the conditions set forth in the law. If the
payer fails to file a return and fails to pay the tax, or does
so late, i.e., after the deadline for the filing of the return,
he can face a penalty in the form of interest on the delay (a monetary
fine) or the tax can be increased by up to 10%.
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