RENTAL INCOME IN CZECH REPUBLIC - TAXES AND DEPRECIATION
Rental income received by individuals is subject to income tax of 15% or 23%. The rate of 15% applies to the tax base up to 48 times the average annual wage (i.e. up to CZK 1,701,168 as of 2021 with the abolition of the super-gross taxation). The rate of 23% applies to the tax base above this limit.
BASIS TO TAX
The tax base is calculated as rental income (excluding occasional rent of movable assets) reduced by the deductible expenses. Expenses can be determined either as actually spent expenses or as 30% of gross income as lump-sum expenses but no more than CZK 600,000. Depreciation is applicable when decreasing tax base using the 'actual expenses' model.
DEPRECIATION
As a rule, the depreciation item will bring us the largest reduction of income taxes when renting.
Depreciation is the wear and tear of real estate. Every year the property wears out and we can reduce taxes by the amount of wear and tear. The value used for this calculation is the purchase price minus price of the land if the apartment was bought in the last 5 years. If we inherited the property, we must have a valuation of the property elaborated as of the date of acquisition.
Keep in mind that the following property types CANNOT BE DEPRECIATED in Czech republic:
1 Cooperative apartments (cooperative ownership)
2 Land
3 Real estate donated without financial consideration
We CAN depreciate the following:
1 Residential and non-residential units
2 Houses
3 Apartment buildings
4 Recreational buildings
5 Commercial real estate
That said, here is a link where you can calculate your depreciation. ( Real estate usually falls under depreciation group 5 ) :
https://www.uctovani.net/kalkulacka-o...
Additional Personal Tax credits in Czech Republic (This might be automatically applied by your employer if they do file taxes for you)
-General personal tax credit: CZK 27,840
-Dependent spouse tax credit: CZK 24,840 if the spouse lives with the taxpayer and does not have income in excess of CZK 68,000.
-Child tax credit: CZK 15,204 for the first, CZK 19,404* for the second, and CZK 24,204* for the third and other following dependent child (under certain conditions).
Also keep in mind that depreciation is not a way to avoid taxes but defer them, and depreciation may be recaptured at the sale of the asset.
Always consult with your lawyer as this does not constitute legal advice.