Sales and Taxes 

for Czech Republic

Frequently Asked Questions about the Time Test for Property Sales

When do I not have to pay tax on the sale of a property?

You are exempt from paying income tax if you lived in the property for at least 2 years before the sale, or if you use the proceeds from the sale to purchase another property intended for your own residence.

What about investment properties?

For properties that were not used as your primary residence, a 10-year time test applies. For properties purchased before December 31, 2020, a shorter period of just 5 years applies.

What if I don't meet the time test requirement?

If the time test is not fulfilled, the profit from the sale is taxed at a rate of 15%. A higher rate of 23% applies to the portion of income that exceeds 48 times the average annual salary in a given year (so-called solidarity tax).

How is the time test calculated?

The time test is calculated from the date you acquired the property – typically from the signing of the purchase agreement. In the case of inherited property, the time test begins from the date the deceased acquired the property, meaning the ownership period of the previous owner is also included. This can help you meet the time requirement sooner.

How is the tax base determined?

If the time test is not fulfilled, the tax base is the difference between the selling price and the acquisition cost of the property. The acquisition cost is the amount for which the property was originally purchased, or the value stated in inheritance or gift proceedings. You can also deduct documented costs of improvements or repairs and other related selling expenses (e.g. real estate agent fees).

What about inherited property?

When you inherit a property, the time test does not start from the date you acquired it, but from when it was acquired by the deceased. This means the period during which the previous owner held the property is also counted.

Example:
If your parent owned a property for 8 years and you inherit it, you only need to keep the property for another 2 years to meet the 10-year time test. If you sell it earlier, and the condition is not met, you must pay income tax just like with a regular sale.