Are you paying a loan and wondering
how the deduction of interests works? Tax deduction can be conducted
while you are submitting periodic tax declarations. The mortgage
interest deduction is offered as an incentive for a natural person - an
employee or self-employed person. Paid interests are deductible from income tax base.
This means your tax base will be lower and you will pay less than
without the interest deduction. You are allow to deduct paid interest in
maximum amount of CZK 300,000 per year. With a 15 % income tax rate you can save up to CZK 45,000 per year.
Qualifications for a Full Mortgage Interest Deduction:
- You are obliged to be a contracting party. Contracting party in this case is a natural person - an employee or self-employed person.
- Specification of person who is receiving the loan. It does not have to be you, but the loan should receive the person close to you. It means family member such as siblings, parents, husband, wife or a person you are living with.
- Purpose of the mortgage loan as it has to be provided for housing needs. It means the mortgage loan was provided for the purpose of house or apartment purchase, reconstruction, remuneration for the share on private dwelling or other purposes connected with housing.