Who keeps the flat and who pays the mortgage after a divorce

In a Czech divorce, the bank is not bound by your settlement: both of you owe the full mortgage until the bank releases one of you or the loan is repaid. The flat and the debt are settled as part of the spouses' community property (společné jmění manželů, SJM): one of you keeps the flat and buys the other out, or the flat is sold.

You have three years from the end of the community property to agree; after that, the law decides for you. Tax and bank fees are rarely the sticking point. Settling community property is outside the scope of income tax, and repaying the mortgage as part of it is free provided at least 24 months have passed since the loan agreement was signed. The outcome therefore usually turns on a single question: can the spouse who stays carry the loan alone once it has grown by the cost of buying the other out?

What happens to the mortgage after a divorce?

You signed the loan agreement as co-borrowers, so under § 1872 of the Civil Code each of you owes the whole amount. Neither the divorce decree nor your own agreement changes that, because a settlement of debts binds only the spouses themselves (§ 737(2)). If your former partner stops paying, the bank will ask you for the full instalment, and you can only reclaim their part from them.

There are three ways out of the loan. The bank releases one co-borrower through an amendment; the spouse who stays takes a new mortgage with another bank and repays the old one; or the flat is sold and the loan paid off from the price. How banks assess a release is covered in Transferring a mortgage to another person.

Until the settlement is done, the community property rules continue to apply to the flat and the debt (§ 736). Agree in writing at least on who lives in the flat in the meantime and who pays. If you cover the instalments from your own money after the divorce, keep the bank statements, because they count in the settlement.

Three options for the flat and the loan

The third option can happen without anyone choosing it. If you do not agree within three years of the end of the community property and nobody goes to court, § 741 treats you as owning the flat in equal halves as co-owners, with the debts shared equally too. Whoever wants the flat alone must not miss that deadline. How a mortgaged flat is sold is explained in Selling a property with a mortgage.

How much does the spouse who leaves get?

The starting point is the flat's net value: its market price according to a valuation, minus the outstanding loan. Under § 742 both spouses' shares are equal. Before the split, though, each takes back what they put into the shared flat from their separate property, such as an inheritance or savings from before the wedding. That amount is adjusted for how the flat's value has moved since. The court also takes into account who looked after the children and the household.

What counts is the value on the day of the settlement, not the purchase price. Get a valuation (odhad) you both accept; a bank valuation usually costs CZK 3,000–6,000.

Before you start negotiating the shares, check how much a bank would lend you on your own in the How much can I borrow calculator.

From agreement to the land registry

1. Valuation of the flat and a statement of the outstanding balance from the bank. A few days.
2. Pre-approval of a new loan, or a request to release the co-borrower. The bank assesses the staying spouse's income as it would for a new mortgage, usually within 2–4 weeks of receiving complete documents.
3. The agreement settling the community property. If it covers the flat, it must be in writing (§ 739). For an uncontested divorce, where the court does not look into the reasons (§ 757), it has to be ready when you file, with officially certified signatures.
4. Signing the new loan agreement or the amendment, repaying the old mortgage and paying out the partner, ideally through a lawyer's or notary's escrow account. Repaying the old mortgage as part of the settlement costs nothing once 24 months have passed since the loan agreement was signed.
5. Applications to the land registry (katastr) to record the transfer and delete the original lien. Each application costs CZK 2,000, and the registry may make the entry no sooner than 20 days after it notifies the owners of the pending change (plomba). For a flat, the agreement takes effect only once it is registered (§ 738).

With an agreement, allow two to three months in total. Without one, a court decides on the basis of the situation on the day the community property ended (§ 740). That takes considerably longer, and the whole time you both remain liable to the bank for the full instalment.

Tax and fees on the settlement

• No income tax. Income from settling community property is outside the scope of income tax (§ 3(4)(c) of the Income Tax Act), so the bought-out share is not taxable income for the spouse who leaves.
• The holding period keeps running. Settling community property does not interrupt the time between acquisition and sale (§ 4(2)(c)), so whoever sells the flat later counts from the original purchase.
• Interest on the new loan is deductible. A loan to pay out a former spouse's share finances a housing need under § 4b(1)(f), so the interest qualifies for the deduction of up to CZK 150,000 a year. The procedure is in Mortgage interest deduction.
• Early repayment without a penalty. Repaying the mortgage when settling community property after a divorce is free if at least 24 months have passed since the loan agreement was signed. Otherwise the bank may charge no more than 0.25 % of the amount repaid for each started year left until the end of the fixed period, and 1 % at most in total.
• Fees: CZK 2,000 per land registry application, the valuation, the bank's fee for the amendment under its price list, and the lawyer's or notary's fee. Property transfer tax (daň z nabytí nemovitých věcí) has not existed since 2020.