Rental income tax can be high
Taxation Researcher | July 19, 2018
Effective Tax Rate on Rental Income
|Click here to see a worked example|
|Source: KPMG BDO Disclaimer|
Nonresidents are liable to tax only on their income from Czech sources. Spouses with at least one child may opt to be taxed jointly under certain conditions. Nonresidents are allowed to avail of tax credits, provided that they earn 90% of their income from Czech sources.
Taxable income is generally an aggregate of all kinds of income, less the allowable expenses. Income is taxed at a flat rate of 15%.
Rental income from a non-business property jointly owned by a married couple shall be taxed as income of only one of them. Taxable rental income can be computed in two ways:
- Income less actual expenses and deductions; maximum of CZK600,000 (€21,429)
- Standard deduction of 30% of gross rent in lieu of itemized deduction of actual expenses; maximum of CZK600,000 (€21,429)
Gains on the sale of property in the Czech Republic are generally included in the computation for the aggregate taxable income and taxed at the standard income tax rate of 15%. Capital gains are generally computed as selling price less acquisition costs.
Real Estate Tax
Real estate tax is levied on all properties in the Czech Republic, payable by the owner. Applicable rates vary depending on the kind of real estate.
For land, tax rates vary depending on land use and land area. For building land, land tax is CZK2 (€0.07) per square metre, and CZK0.20 (€0.01) for other types of land.
For building or flats, tax rates vary from CZK2 (€0.07) to CZK10 (€0.36) per square metre. Residential and agricultural buildings are subject to real estate tax at CZK2 (€0.07) per square metre.
For some types of property, the real estate tax rates are also multiplied by a coefficient of one to five, depending on the location of the property.