The cancellation of the property acquisition tax is set to be approved

Prague - The government proposal to abolish the real estate acquisition tax is heading for final approval in the Chamber of Deputies today. The proposal will also abolish the possibility of deducting mortgage interest from the tax base in the future. However, some MPs are striving to keep this option and presented their amendments in this direction during today's second reading.

The opposition ODS has been repeatedly trying to abolish the tax. The last time this proposal was brought up was last year by the SPD, and the government rejected it. The state collects up to 13 billion crowns annually from this tax. The acquisition tax rate is four percent, and since 2016 it has been paid by the buyer. Finance Minister Alena Schillerová (for ANO) explains the previous negative government positions on abolishing the tax by saying that it did not want to deprive the state budget of collected money. She expects the abolition of the tax to lead to a reduction in the costs of acquiring one's own housing and also to a clearer tax system. Additionally, she considers the acquisition tax to be unfair.

Today, the minister told MPs that this is a classic tax exception that not everyone will benefit from. She cited children whose parents save money for them to buy housing, allowing them to avoid taking out a mortgage. She added that only individuals pay this tax because legal entities can circumvent it by transferring business shares. She assured that the possibility of deducting interest on loans from the tax base will remain for existing mortgages even in the case of refinancing.

The option to deduct paid interest from the tax base will also remain for new mortgages, but only until the end of 2021. Interest deductions will no longer be possible for loans granted from January 1, 2022. "For properties acquired between December 2019 and December 2021, it is stipulates that the buyer will not pay the acquisition tax and will simultaneously be allowed to deduct interest on housing loans from the tax base," the Ministry of Finance previously stated.

Many MPs, however, want to preserve the possibility of deducting interest on housing loans. Among them is government MP Václav Votava from the ČSSD. "The deduction of interest paid on loans from mortgages and building savings from the tax base is significant support for acquiring housing, especially for young families. It is therefore desirable to maintain this support for housing," he stated regarding his proposal.

A similar proposal was also made by the Civic Democrat Vojtěch Munzar, who simultaneously suggests extending the government-proposed transitional period as an alternative. The chairman of the Christian Democrats, Marian Jurečka, also proposes to extend the transitional period. Věra Kovářová (STAN) also wants to maintain the interest deduction, as do SPD MPs Jan Hrnčíř and Lubomír Španěl. Pirate MP Tomáš Martínek wants to exempt only Czech citizens and EU countries from the tax while companies would be subject to it.