The Chamber confirmed the end of the real estate acquisition tax

Prague - The Chamber of Deputies confirmed the abolition of the property acquisition tax. Today, it only inserted an amendment from the Senate into the government proposal for the repeal of this tax, which aims to correct some legislative errors. It concerns a part of the bill that retains the possibility of deducting mortgage interest from the income tax base, but otherwise does not change the proposal. Minister of Finance Alena Schillerová (for ANO) supported the Senate version. The law will now be sent for signature to President Miloš Zeman.

Today, 91 out of 93 present deputies voted for the abolition of the tax. None of them voted against.

Initially, the government proposed that with the abolition of the tax, buyers would not be able to deduct the paid interest from the tax base on income for new housing loans provided after January 1, 2022. This was mainly criticized by opposition deputies, but it also bothered some coalition deputies. The Chamber then adopted an amendment that retains the deductions. However, it reduces the maximum possible deduction amount from the current 300,000 crowns to half.

The Senate's amendment also stipulates that the existing interest deduction limit of 300,000 crowns will apply to loans provided until the end of this year. For loans provided from next year, only the new limit of 150,000 crowns will apply.

The property acquisition tax rate, which in the past replaced the transfer tax, is four percent and is paid by the buyer. The now-repealed legal measure was adopted by the Senate in 2013 when the Chamber was dissolved before early elections.

In recent years, the state has collected around 13 billion crowns annually from this tax. Minister Schillerová has previously described the acquisition tax as unfair. However, all previous attempts to abolish this tax have failed. This also did not succeed last year when it was proposed by the Senate.

The minister stated that the tax will be abolished retroactively as of March 31 of this year. The amendment has retroactive effect. This means that people who had a deadline for filing declarations until March 31 and subsequently postponed due to the pandemic until the end of August will no longer have to pay the tax. If someone has already paid it, the office will refund the money in the standard way for the refund of overpayment, the minister assured. This applies to people who completed their registration in the cadastre in December 2019 or later.

The approved law also extends the so-called time test for income from the sale of real estate not intended for own housing from five to ten years. The extension of the time test will apply to properties acquired after January 1, 2021.