Mortgage and taxes — what you can and can't deduct
Czech tax rules for mortgages have significantly tightened since 2021. Here's what's still deductible in 2026 and how to optimize legally.
Mortgage interest deduction
You can deduct up to 150,000 CZK of paid mortgage interest per year from your tax base. Conditions:
- Property must be used for own permanent residence (not rental, not vacation)
- Mortgage must be in your name (or joint with spouse)
- Property must be in CZ
Effective tax saving: 150,000 × 15 % = up to 22,500 CZK per year.
Property tax (daň z nemovitosti)
Annual property tax depending on property type and location. Typical apartments in Prague: 800–2,500 CZK/year. Owner pays, regardless of mortgage.
Real estate transfer tax
Real estate transfer tax (4 %) was abolished in 2020 — when buying, you no longer pay this. Saves about 200,000 CZK on a 5M flat.
Capital gains tax on sale
If you sell the property:
- Lived in it for 2+ years before sale — exempt
- Owned 5+ years (any use) — exempt
- Otherwise — gain taxed at 15 %
Most people fall into the exempt categories.
FAQ
Can I deduct mortgage interest on a rental property?
No. Since 2021, mortgage interest on investment property is not deductible from rental income or against any other income. The 150,000 CZK deduction applies only to property used as own residence.
What if I move out and start renting it?
Loses the personal-residence deduction from that point. Can switch back if you move back in. Notify tax authority of the change in use.
How do I claim the 150,000 CZK deduction?
Bank gives you an annual interest confirmation. You enter the amount on your tax return (line for 'paid interest from mortgage'). Employees can claim through annual employer reconciliation; self-employed in their own filing.