THE MINISTRY OF FINANCE PROPOSES REVOCATION OF THE REAL ESTATE TRANSFER TAX WITH RETROACTIVE EFFECT
Due to the current negative economic prospects the government proposes changes which it has refused in the past. One of these is the revocation of the real estate transfer tax.
The government claims this proposal aims to increase the availability of young people to obtain their own property and at the same time keep higher amounts in cash after closing a transaction, nevertheless this proposal revokes the tax as a whole and therefore applies to legal entites and relevant real estate transactions. As a part of this complex proposal the possibility to deduct the mortgage interest payments from taxes will be eliminated for newly executed mortgages.
Furthermore, the possibility for a tax-free transfer will be changed in a way that if the property is not acommodated by the owner, then in order to qualify for a tax-free transfer such property must be owner at least 10 years prior to the transfer as opposed to current 5-year period, the government claims this is implemented in order to limit real estate market speculations.
RETROACTIVITY
The Ministry of Finance claims there is no reason to delay submissions to the Cadastre until this law is passed because regardless of the date of its adoption everyone whose tax was due from the 31st of March 2020 shall benefit from this law. This means that the tax would be waived for any real estate transaction which was finalized by the Cadastre during December 2019 or later. If the tax has already been paid then a tax overpayment will originate and the taxpayer may request it to be refunded.
OPT-IN
The proposal will also include the option suitable for example for people with a newly bulit houses, which are tax-free. These people would have to notify the tax authority within the deadline for tax payment or within 30 days of the day on which this law is enacted that they would prefer to submit themselves to this tax and then they could utilize the option to deduct the mortgage interest payments. All taxpayers whose tax was payable from the end of March and their transfer was registered in the Cadastre until the end of 2019.
This proposal will be discussed today (17th of April 2020) among the coalition and with the National economical advisory board of the government.
We shall publish up-to date information regarding this matter on our website, in case of any queries do not hesitate to contact us at any time.
For more information please contact:
JUDr. Monika Rutland, partner
rutland & partners, advokátní kancelář s.r.o.
tel: +420 226 226 026
email: monika.rutland@rutlands.cz
