This does not mean that the transaction should proceed without legal review. The purchase agreement, title check, payment structure, Land Registry filing and tax consequences should all be considered carefully.
No mandatory notarial deed
A Czech real estate purchase agreement must be made in writing. It may be prepared by the parties, a lawyer or a notary, but it does not have to take the form of a notarial deed.
This affects transaction costs: there are no compulsory notarisation fees linked to the purchase price simply because the property is being sold. Professional drafting or legal review is nevertheless advisable, as mistakes in the agreement can have serious consequences.
Ownership passes upon registration
Signing the agreement does not automatically make the buyer the owner. As a rule, ownership passes only when it is registered in the Czech Land Registry (katastr nemovitostí).
The purchase price is therefore commonly protected through a lawyer’s, notarial or bank escrow. The funds are released once the agreed conditions have been met, typically after the buyer’s ownership has been registered.
Before buying, it is important to check mortgages and other charges, easements, restrictions on disposal, enforcement or insolvency proceedings and third-party rights. For an apartment, the legal and financial position of the owners’ association should also be reviewed.
Land Registry and transaction costs
The standard fee for an application to register the transfer of ownership is currently CZK 2,000.
Other costs may include drafting or reviewing the purchase agreement, escrow, signature certification, translations, a technical inspection, an estate agent’s commission, financing and mortgage registration. The overall cost depends on the structure and complexity of the transaction.
No transfer tax, but other taxes may apply
The former Czech real estate acquisition tax was abolished in 2020. An ordinary property purchase is therefore not subject to a separate transfer tax.
VAT may still be relevant, particularly where a new or substantially altered property is sold by a VAT-registered developer or business. The agreement should state clearly whether VAT applies and whether it is included in the price.
The new owner must also consider the annual Czech immovable property tax. As a rule, a tax return must be filed by 31 January of the year following the acquisition.
Income tax on a later sale
Buying property at market value does not normally create taxable income for the buyer. Tax usually becomes relevant if the property is rented out or later sold.
If no exemption applies on a sale, the taxable amount is generally the gain calculated under the relevant tax rules, rather than the full sale price. Documents showing the acquisition price and other eligible expenses should therefore be retained.
When can a sale be tax-exempt?
Use as the seller’s home
The sale of a house or apartment may be exempt if the seller actually lived there for at least two years immediately before the sale.
Holding period
If the property was not used as the seller’s home, the following general holding periods apply:
- five years for property acquired by 31 December 2020;
- ten years for property acquired from 1 January 2021.
The conditions and any special exceptions should be checked before the property is sold.
Gifts and inheritances
The Czech Republic no longer has separate gift tax or inheritance tax. Inheritance received by an individual is generally exempt from Czech income tax. Gifts may be exempt or taxable depending on the relationship between the parties and the circumstances.
Cross-border gifts and inheritances may also be affected by the tax rules of another country and require an individual assessment.
Conclusion
Buying property in the Czech Republic can be structurally simpler than in some other jurisdictions because the purchase agreement does not require a notarial deed and there is no separate transfer tax. Even so, the agreement, registration process, payment security and tax treatment should be reviewed carefully.