Real Estate Information
How to be Real Estate Savvy in Prague
When you want to purchase or rent property, you need access to all the relevant facts in order to make an informed decision. Prague’s fast-moving real estate market with its vast variety of properties, agents and prices more often than not is overwhelming. This section provides information you need including the most desirable investment locations in Prague, procedures for buying or renting, mortgage conditions and so on.
Buying Real Property in Prague
People from all over the world are investing in Prague, one of the most beautiful cities in all of Europe. Compared to the prices of residential and commercial real estate in major European cities, the prices are still reasonable with solid growth potential. Following are a few facts you should be aware of as you approach your purchasing decision.
Can a foreigner buy real property in Prague?
Up until May of 2009 there were two categories of foreign property buyers in the Czech Republic – EU citizens and non–EU citizens. In May of 2009, the Czech Republic had its 5 year anniversary as an EU country at which time it became legal under EU law for anyone in any country to buy a house, an apartment, or buildable land in the Czech Republic as an individual without being a resident of the Czech Republic or making any applications for residence permits or visas other than those required by law for entry into the country as a tourist. In May of 2011, based on EU laws, the same became true for agricultural land and forests.
Can foreigners live in the property they purchase?
This broadening of the law for foreign property buyers does not change the categories of foreigners (EU citizens and Non-EU citizens) who wish to live for more than 90 days in the property they purchase. Owning property in the Czech Republic does not give you the right to live in the property unless you go through the proper channels of becoming a resident. EU citizens only have to register with the foreign police and apply for a Czech EU residence card. A Non-EU citizen wishing to buy a home and live in the Czech Republic for more than 90 days must obtain a residence visa. Residence visas can only be obtained for very specific activities or reasons. You can apply for:
• Work permit, work visa through a valid employment contract
• Business visa – apply to be a free lance business person, or through a local company for executive position
• Student visa
Tip: One can be a partner or manager of ones own company and the company can be the owner of the property.
Applications for residence permits may also be filed from abroad at Czech embassies or general consulates, but may take up to three months to process. If coming to Prague is not convenient for you, you may choose to designate a representative to file the application and arrange for the required documents.
Our legal department will be glad to arrange all of the above at a reasonable cost.
Are mortgages available to foreigners?
Mortgages are available to citizens of the EU as well as to non-EU citizens. Probably the most convenient, cost effective and stress-free way to arrange a mortgage is through a mortgage broker. There are also several banks that have recently developed products for financing the purchase of residential real estate for foreigners.
Taxes
Real Estate tax: All properties are subject to a nominal annual real estate tax depending on the position and size of the property. A typical two-bedroom apartment in the center, for example, would be taxed at about CZK 1 000 per year.
Transfer tax: Whenever a property is sold and title is transferred there is a real estate transfer tax of 3% of either the assessed valuation or the sale price, whichever is higher. The seller normally pays this tax unless the parties agree otherwise.
Income tax: A property owned by a company and generating an income is subject to taxation at the current rate of 19%. Individual Czech persons, EU citizens and foreigners with residence permits, are subject to a 15% income tax based on the amount of income earned in the Czech Republic. With a "Zivnostensky List", or business license, Individual Czech persons, EU citizens and foreigners with work permits, are subject to a 15% income tax based on the amount of income earned in the Czech Republic during a relevant taxation period. With a Zivnostensky List 20% - 60% (depending on the kind of business activities) of the total revenue is used as base for the calculation of the 15% income tax. The total income tax is then reduced by certain tax benefits. In most cases the total charges (income tax, social charges, health insurance- if you have permanent residency) will be around 15% of the total revenue, so approximately 85% of what you have earned you will have at your disposal.
VAT on sales: The new amendment to the VAT act gives a definition of an apartment, and a family house meeting the criteria for “social housing“ structures. The entire floor area of an apartment must not exceed 120m2 to qualify as a “social housing“ apartment. The total floor area of a family house must not exceed 350m2 to qualify as a “social housing“ family house. Newly built “social housing“ is subject to VAT at 14% of the purchase price. New residential properties over the limit of the “social housing“ are subject to VAT of 20%. Commercial sales are usually subject to VAT at 20% of the purchase price. Ask your Svoboda & Williams agent for specifics concerning your particular circumstances.
Services for Foreigners in Prague
Relocation
Our agency will be glad to tailor relocation packages to suit your demands including filing applications for work permits, customs clearance, etc. We familiarize newcomers with Prague, schools, resources, its neighborhoods, medical facilities, mobile phones, dining and entertainment spots and any other information regarding living in Prague and getting settled in a new home. We offer suggestions for housekeeping and babysitting services. We are available at any time, days, evenings and weekends to be of assistance to our clients. For further information regarding Prague, we provide comprehensive guides on Svoboda-Williams.com Lifestyle, Prague-Stay.com Lifestyle and FeelHome.cz All About Housing.
Setting up a company
Our legal department will be glad to assist expats and foreigners, for further details: Legal Services for Foreigners.
General Information
Prague Neighborhoods
Prague is divided into districts 1-15. The Prague center stretches over Prague 1, 2, areas of Prague 7, and the Smichov/riverbank area in Prague 5. This is the oldest, most charming part of Prague, where you can enjoy culture, business and leisure. Prague is connected with excellent public transportation (for further info on metro, trams and buses - www.dpp.cz). Most visitors find that exploring the center on foot is the most rewarding way of getting to know the city.
Areas of Particular Interest for Investors:
Prague 1 is the historic part of Prague. It spans the Vltava River and includes Malá Strana, Old Town, the Jewish Quarter, and the Prague Castle area (Hradčany). The world famous Charles Bridge and Old Town Square are in Prague 1.
Old Town (Staré Město) is the center of historic Prague 1. The impeccable preservation of centuries old architecture gives Old Town a fairytale like atmosphere complemented by many restaurants, sidewalk cafes, shops, businesses and abundant nightlife.
The Jewish Quarter (Josefov) in Old Town is an architectural feast for the eyes, with block upon block of elegant highly decorated neo-classical, and Art Nouveau buildings displaying the wealth of past centuries. Five major synagogues, the historic Jewish cemetery and Prague’s most glamorous shopping street, Parizska, are in Josefov.
Malá Strana (The Lesser Town) is on the left bank of the Vltava River. Just below Prague castle, it is a romantic old neighborhood with picturesque buildings and narrow cobblestone streets winding up the hill to the Prague Castle complex. Malá Strana has a special tranquility not found on the opposite bank of the Vltava.
Hradčany is the charming neighborhood surrounding Prague Castle and overlooking Mala Strana. In the past Hradčany was part of the castle grounds.
Prague 2 has more of a residential character than Prague 1. Hence it is quieter, but nevertheless lively. Most of the architecture dates from the late 19th century and early 20th century.
Vinohrady (formerly the king’s vineyards) is a residential neighborhood on a hill just behind the National Museum. It is a short walk to Old Town and is less touristy. Most of the apartment buildings date from the mid to late 19th and early 20th centuries (high ceilings, traditional lines, parquet flooring, ornate facades, etc.).
Nové Město (New Town) was laid out by King Charles IV in the 14th century. It spreads eastward from the Vltava River and south of the National Theater. Partly in Prague 1 and mostly in Prague 2, Nové Město has beautiful architecture from the late 19th and early 20th centuries but boasts more urban flare than Vinohrady. Close to Old Town but not as exclusive, parts of Nové Město are quickly developing a unique character and are often referred to as the Soho of Prague.
Prague 4 is one of the largest districts in the southern part of Prague stretching from the lower edge of the center to the city limits. The southern part of Prague 4 includes many small villages, residential neighborhoods and open farmland. There are several major large retailers, shopping centers and newly built modern office complexes located in Prague 4.
Prague 5 starts from the bank of the Vltava River and stretches to the western edge of the city. The area has a variety of individual houses, large row houses and apartments. Prague 5 has several newly built shopping and commercial centers.
The Riverbank area in Prague 1, 2 and the northern sections of Prague 5, is virtually in the city center and offers many attractive apartments in the late 19th century and early 20th Neo-Classical and Art Nouveau styles. Properties offer breathtaking views of the river and Prague’s world famous architecture.
Prague 6 extends from the Prague Castle complex to the northwestern city limits. This is primarily a residential area offering individual family homes with gardens. Most of the diplomatic community lives and works in Prague 6.
International Schools
Many people factor in the availability of schools in the area of residence when looking to buy/rent property. Following is a list of most commonly asked for international schools in Prague.
The International School of Prague (ISP) is in Prague 6, Nebusice. The ISP is convenient to all of Prague 6, parts of Prague 5, and the villages of Nebusice, Horomerice, Predni Kopanina and Mala Sarka. This neighborhood is home to families with school children from all over the world. ISP offers an educational program for students in pre-kindergarten through grade 12. More information about the International School of Prague is available at www.isp.cz
The Prague British School (PBS) is a fully accredited school providing education based on the English National Curriculum. It serves the international as well as the Czech community with a current enrollment of 600 students. The PBS has comprehensive academic programs beginning with elementary education up to completion of the secondary education. In addition there is a daycare center for children over 20 months as well as pre-school program for children 3 – 5 years old. The school currently has two separate facilities, Kamýk in Prague 4 and the Vlastina campus in Prague 6. For detailed information please visit the PBS web site: www.pbschool.cz
The English International School is in Libus, Prague 4 and is for children ranging in age from 2-18. Many pupils then transfer to the English College in Prague whilst others go on to boarding or day schools in the UK and elsewhere. More information is available at www.eisp.cz
The English College in Prague is located in Prague 9. The school is convenient to public transportation. Families with students attending the English College usually live in other areas of Prague and the students use public transportation. The English College Foundation, London, established the English College in Prague to provide a broad and balanced education in English for students between 13 and 19. More information is available at www.englishcollege.cz
Lyceé Français de Prague is located just southwest of the city center in Smichov, Prague 5. It is convenient to the center, the riverbank and to Prague 5. More information is available at www.lfp.cz
The Riverside School is an accredited International School in Prague for children aged 3-18 years. „British National Curriculum and American Teaching Resources“. For more information, www.riversideschool.cz
The German School, for children of all ages from Kindergarten through Gymnasium is located in Jinonice, Prague 5, in a modern campus. More information is available at www.dsp-praha.cz
Preschools
Prague 4 - The International Montessori Preschool - They enroll toddlers 18 months - 3 years and primary students ages 3-6. Children are taught in English. The school is located in Prague 4 and is convenient by metro and by car. More information at www.montessori.cz
Prague 6 - Bumble Bee has preschool children from ages 3-6 and an after school club for children ages 6-10 and summer session for children ages 3-10, weekdays from 8 a.m. until 6 p.m. More information is available at www.bumblebee.cz
