Real Estate Tax Changes - What do they mean for you?

If you own real estate, you will certainly be affected by the recent increase in the real estate tax rate, but there are many other changes to the Real Estate Tax Act. Will this also have impact on you and will you have to file a new tax return? Below you will find a general summary of the most important changes.

1. Increases

The tax rate increases by approximately 80 %. If you did not buy real estate in 2023, you do not have to bother with the calculation or file a new tax return. You will receive information about the new tax liability (now also by e-mail upon request) by the tax due date, i.e. by May 31, 2024.

Even with the newly introduced inflation coefficient, which will increase the tax by inflation, you will not have to file a new tax return. It was set at 1 for 2024 and will not affect your tax liability this year. The relevant inflation coefficient will be announced by the Ministry of Finance each year with a maximum increase by 20% year-on-year. Agricultural land has been protected from inflationary increases and its inflation coefficient will always remain at 1.

Further increases concern the minimum tax for a co-ownership share in real estate, from CZK 50 to CZK 90.

Another increase, this time for the benefit of the taxpayer, concerns the threshold for the minimum payment to a single tax office. If the tax is less than CZK 50 (previously CZK 30), the tax office will not demand payment.

2. Tax exemptions

On the one hand, the amendment abolishes tax exemptions for certain land, taxable buildings and waste-related units; on the other hand, it introduces new tax exemptions (e.g. for real estate property used by child care service, facilities for a child group or social cooperatives and for certain land located in a national park).

Furthermore, municipalities have the authority to exempt certain types of land from tax (newly, e.g. gardens), or to reduce the local coefficient for defined groups of real estate.

You will be required to file a tax return in this group of changes if you want to claim tax exemption, which you can do as early as 2024. The deadline for filing the tax return is the end of January.

3. New definitions

New definitions of the terms “land type”, “land use” or “use of a building” are introduced. In addition, the floor area of a unit should now be recorded in the Real Estate Register. The tax liability will then be calculated based on this number. If it is not listed in the Real Estate Register, it will be based on the owner's declaration or the actual state.

There are many more changes; garage owners, for example, should be alert, as they may have a new obligation to file a tax return. The tax authorities have set up consultation hotlines and will extend office hours. They estimate that about 100,000 people will have to file a new tax return.

By Mgr. Bc. Karolína Szturc

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