Real estate companies: Maintaining deductions for mortgage interest is reasonable

Prague - The preservation of tax deductions on mortgage interest is good news for the real estate market. It is the only advantage when acquiring new housing. This was stated by representatives of real estate companies contacted by ČTK today. Despite the government's proposal, the Chamber of Deputies today approved the preservation of deductions. At the same time, it abolished the property acquisition tax, a step the market expected. The proposal still needs to be reviewed by the Senate and signed by the president.

"The abolition of the property acquisition tax is very welcome and will help many clients acquire new property. The savings can then be used for furnishing their housing or kept as a reserve for harder times. The preservation of the loan interest deduction is positive news for everyone who must use bank financing," stated Tomáš Trauške, regional director of the 4fin company.

As stated by mortgage specialist Daniel Horňák from Bidli, the market expected the confirmation of the abolition of the property acquisition tax, so it is not surprising. "The good news is certainly the preservation of mortgage interest deductions. This option is realistically the only advantage when acquiring new housing, and abolishing it would make any financial support impossible, for example, for young families," added Horňák.

According to Martin Březina from Re/Max Alfa, potential buyers are already treating the property acquisition tax as if it has been abolished. "I therefore don’t think that the formal abolition of the tax would lead to a sudden increase in interest. On the contrary, if the tax were not abolished, many people who bought property now would get into financial trouble, as they no longer count on the tax payment and are not prepared for it," noted Březina.

Hendrik Meyer, director of Bezrealitky, stated that today's decision of the Chamber is unequivocally a good step. According to him, housing is one of the basic human needs, and removing barriers in the real estate market is commendable in these uncertain times. "Personally, I also consider it reasonable to keep mortgage deductions. In a situation where the majority of people in the Czech Republic still prefer to buy their own housing despite rising prices, it is a concession that makes sense. Especially when a more complex management of mortgage-burdened households is likely to come along with the expected economic downturn," Meyer said.

According to Jan Boruta, managing director of FérMakléři.cz, the abolition of the property acquisition tax will lead to more affordable housing. "Although one could speculate whether sellers might try to raise the property price due to the abolition of the tax, I do not expect this to happen in the current situation," added Boruta.

The rate of the property acquisition tax, which in the past replaced the transfer tax, is four percent and is paid by the buyer. The state has collected around 13 billion crowns from it annually in recent years. Schillerová calls the property acquisition tax unfair. However, all previous attempts to abolish this tax have failed. It was not successful even last year when it was proposed directly by the Senate.