Selling Czech Property Before Emigration 2026: 10-Year / 2-Year Time Test, Reinvestment and Income Tax

The 2026 time test: 10 years for investment property, 2 years for own housing

Since 1 January 2021 the Czech Republic uses an extended time test for income-tax exemption on property sales under § 4(1)(a) and (b) of Act No. 586/1992 Sb. on income taxes. For real estate acquired after 1 January 2021 the test is 10 years from acquisition; for own housing (a property where the seller had bydliště immediately before the sale for at least 2 years) the 2-year time test still applies. For property acquired before 2021 the old 5-year test continues. None of this changes in 2026.

Emigration brings a key choice: sell before changing tax residency, sell after, or keep the property and rent it out. Each option carries different tax outcomes that can swing your net proceeds by tens of percent.

Sale before residency change

If you sell as a Czech tax resident and meet the time test (2 years own housing, or 10/5 years ownership), the income is fully exempt from income tax. Don’t forget the duty to notify the FÚ of an exempt income above 5 000 000 Kč under § 38v of Act 586/1992 Sb. — deadline is the tax-return due date. The penalty for not notifying is 15 % of the unreported amount.

If you don’t meet the time test, the income is taxed at 15 %, but you can deduct the acquisition cost under § 24 and document upgrades and renovations (renovation invoices, expert valuation). Many sellers underestimate this — even without the time test the effective tax is often 5-8 % rather than the headline 15 %.

New exemption: use for own housing need

If the time test is not met but you use the entire proceeds for your own housing need (purchase of new housing in the Czech Republic or abroad, mortgage repayment, building a new home) by the end of the next calendar year, the income is exempt under § 4(1)(v). The use must be reported to the FÚ by the return deadline for the sale year and documented within two years of the sale.

Sale after residency change: 15 % non-resident tax

After losing Czech tax residency, you are a non-resident under § 17 of the income tax act for the purpose of selling Czech real estate. Income from the sale of property located in the Czech Republic is always Czech-source income under DTT (typically Article 13 of the OECD model treaty), even if you are a tax resident of Germany or the USA.

Non-residents face the same time test (2 years own housing / 10 years ownership), but the ”use for own housing need” exemption is questionable and rarely applied where the housing need is met abroad. Tax is 15 % on the difference between sale price and acquisition cost minus documented investments. We strongly recommend an expert valuation of acquisition cost if the property has been held for more than 10 years or the original contract is missing.

Practical example

Mr Novák bought a Prague flat in 2018 for 4 000 000 Kč. He emigrates to Vienna in 2024 and sells in 2026 for 7 500 000 Kč. Documented investments: 350 000 Kč. Acquisition cost 4 000 000 + 350 000 = 4 350 000 Kč. Profit 3 150 000 Kč. The 5-year time test is met (purchase 2018, old regime) — income exempt, tax 0 Kč. If he had bought in January 2021 and sold in 2026 the 10-year test would not be met → tax 15 % × 3 150 000 = 472 500 Kč.

Real estate transfer tax: who pays in 2026

The 4 % real estate transfer tax was abolished by Act 386/2020 Sb. with effect from 26 September 2020. It is no longer paid on any 2026 sale, simplifying settlements and making the Czech market more attractive. Note: for transfers before 26 September 2020 there could still be a residual obligation, but for 2026 sales it is irrelevant.

Real estate tax: an annual obligation even for non-residents

The owner of a Czech property as of 1 January is liable for the real estate tax (daň z nemovitých věcí) under Act 338/1992 Sb. 2026 rates are around 1-3.50 Kč/m² for buildings and 0.30-5 Kč/m² for land, with municipal coefficients of 1-5. For a 75 m² flat in Prague 6 expect roughly 1 200-3 500 Kč per year. A return is filed only in the year of acquisition; later years the FÚ assesses automatically and you pay by 31 May. After the sale, notify the FÚ of the change of owner (cadastral update is automatic but the tax change must be reported).

Practical remote-sale process

Renting instead of selling: the hybrid strategy

Many emigrants conclude an immediate sale is not ideal (poor market, sentimental value, long-term investment). Renting Czech property as a non-resident means 15 % income tax on the rent (after real expenses or a 30 % flat-rate deduction), an annual Czech tax return by 1 April, and a parallel claim of the destination country to tax the same income — DTT relief credits the Czech tax. See our non-resident landlord guide.