How to file a property rental tax return in 2026

Introduction to tax issues of renting

Renting real estate is income that is subject to personal income tax. However, many landlords are not familiar with tax matters and unnecessarily pay more than they have to, or on the contrary risk problems with the tax authority. In this article, we will explain in detail how to correctly submit a tax return from renting real estate, what options you have for claiming expenses, and how to legally optimize your tax liability.

Rental-income filing duties depend on the taxpayer, other income, tax year and current Czech threshold; verify § 38g and Financial Administration guidance rather than applying a single 50,000 Kč rule to everyone.

Category of rental income

Income according to Section 9 - Rent

Passive rental income is generally reported under Section 9 of the Income Tax Act. The expense method, percentage and cap must be verified for the relevant Czech tax year; business-like services may instead require a different classification.

Income according to § 7 - Entrepreneurship

If the actual activity and services constitute business income, § 7 may apply. The applicable flat-expense percentage and cap depend on the income category and tax year; property count alone does not decide classification.

Deciding between Section 7 and Section 9

Passive § 9 treatment may suit many landlords, but classification, rates and contribution effects depend on the actual activity, services, taxpayer and tax year:

Advantages of Section 9:

• Passive § 9 rent is generally not subject to social and health insurance, but confirm classification and actual activity
• Simpler administration
• Possibility of combination with income from employment

When to choose § 7:

• Renting is your main activity
• You provide additional services (cleaning, breakfast)
• You want to deduct depreciation and investments in full

Flat-rate expenses vs. actual costs

Flat-expense method (verify the current percentage)

Flat-rate expenses represent a simplified way to reduce the tax base without the need to record and document actual costs. When renting according to § 9, the percentage and cap applicable under current Czech tax rules.

Calculation example:

• Annual rental income: Kč 180,000
• Illustrative flat-expense method: Kč 54,000
• Tax base: Kč 126,000
• Tax at the applicable current rate: 18,900 Kč

Advantages of flat-rate expenses:

• No record of expenses
• Predictable tax liability
• Simplicity and time saving

Actual expenses

If you have high real estate expenses, it may be more advantageous to apply actual expenses. However, you must keep records and archive documents for the periods required by the applicable tax, accounting and limitation rules.

Eligible rental costs:

• Real estate depreciation
• Repairs and maintenance
• Real estate insurance
• Real estate tax
• Mortgage interest
• Administrative fees
• Energy (if paid by the landlord)
• Repair fund (for apartments) units)
• Leasing Legal Services
• Advertising and Marketing
• Lease Management Software

When Actual Costs Payoff

Actual Costs Pay Off if they exceed the applicable flat-expense percentage. Typically in these situations:

• The first years after buying a property (high depreciation and interest)
• After major reconstruction
• For older properties with high maintenance costs
• When paying off a mortgage with high interest

Comparison example:

• Annual income: Kč 180,000
• Actual costs: Kč 90,000 (50% of income)
• Flat-rate expenses: Kč 54,000 (30%)

In this case, the actual costs will be saved: (90,000 - 54,000) × the applicable current rate = Kč 5,400 in tax.

Real estate depreciation

Basic rules of depreciation

Real estate depreciation is one of the most important costs you can claim. Residential buildings may fall into a depreciation group with a schedule determined by the current tax rules; verify the applicable group and period before calculating depreciation.

Depreciation methods:

• Straight depreciation: Every year the same amount (except for the first year)
• Accelerated depreciation: Higher depreciation in the first years, gradually decreasing

Depreciation calculation

Introduction price: Purchase price real estate + ancillary acquisition costs (real estate commission, acquisition tax, legal services, expert opinion).

Equal depreciation:

• Apply the first-year and subsequent-year rates applicable under the current tax rules and property category

Illustrative example:

• Purchase price of the apartment: 3,000,000 Kč
• Calculate annual depreciation using the current rates for the applicable property category

Proportional application of depreciation

If you rent only part of the year, you apply depreciation proportionally. If you only rent part of the property, you apply depreciation in the corresponding ratio.

Mortgage interest

Mortgage loan interest is a fully eligible expense if the loan was used to purchase the rental property. In the first years of repayment, interest forms a significant part of the costs.

Documentation:

• Mortgage loan agreement
• Annual overview of repayments from the bank
• Evidence of the purpose of the loan

Warning: Principal (debt repayment) cannot be claimed as an expense - only interest.

Deadlines and forms

Deadlines for submission

• Paper return: until April 1 of the following year
• Electronic return: until May 2 of the following year
• With a tax advisor: use the filing deadline applicable under the current rules and filing method

Required forms

Main form: Personal income tax return (DPFO) Appendices:

• Appendix No. 2 - Rental income according to § 9
• Appendix No. 1 - If you also have income from business

Electronic filing

From 2021, electronic filing is mandatory for persons with an established data box. You submit your tax return via:

• My taxes portal (mojedane.cz)
• Data box
• EPO (electronic submission)

Practical procedure for submitting a return

Step 1: Collecting documents

Before starting the preparation, collect:

• Overview of all received rent payments
• Rent contracts
• Cost documents (if you apply real)
• Overview of mortgage payments
• Receipt of paid real estate tax
• Depreciation record

Step 2: Calculation of the tax base

1. Add up all rental income
2. Subtract expenses (flat or actual)
3. The result is a partial rental tax base

Step 3: Filling out the return

V In Annex No. 2, state:

• Line 201: Income from rental
• Line 202: Expenses (flat rate or actual)
• Line 203: Difference (tax base)

Step 4: Calculation taxes

From the total tax base (the sum of all sub-bases), calculate tax at the rate applicable for the relevant Czech tax year and apply only the credits and deductions available under current rules.

Step 5: Submission and payment

Submit the return electronically or in person at the tax office. Pay the tax by the return filing deadline.

Tips for tax optimization

Legal ways to reduce tax

1. Distribution of income to co-owners If you own the property with a partner, divide the income according to the shares and take advantage of tax discounts for both.

2. Timing of Costs Plan major repairs to year with higher rental income.

3. Combination of methods Each year you can choose a different method (flat rate vs. actual costs). Choose the more convenient one.

4. Record all costs When using a flat-expense method, keep income records and compare the available method with documented actual expenses before filing.

5. Depreciation of technical evaluation Major renovations and technical appreciation are treated under the current depreciation rules; do not use a fixed Kč 80,000 threshold without checking the applicable category.

Frequent mistakes of landlords

Error 1: Do not include advance payments for services in income

• Correct: Advances are income, overpayment/underpayment accounting is expense/income

Error 2: Apply depreciation even for flat-rate expenses

• Correct: No other expenses can be applied for flat-rate payments

Error 3: Forget income from the deposit

• Correct: The deposit is not income (if you return it), but a forfeited deposit yes

Error 4: Do not include secondary income

• Correct: Fees for parking, cellar, internet are also rental income

Check from the tax office

What to watch out for

The tax office checks in particular:

• Match between rent records and bank statements
• Legitimacy of applied costs
• Correctness of depreciation calculation
• Evidence of actual costs

Document archiving

Keep records for the periods required by the applicable tax, accounting and limitation rules:

• Lease agreements
• Income documents
• Invoices for repairs and services
• Bank statements
• Depreciation records

Conclusion and recommendations

Proper taxation of rental income is not difficult if you follow the basic rules. Summary of key points:

1. Determine your income category - mostly § 9 (rent)
2. Choose a spending method - illustrative flat-expense method or actual costs
3. Keep records - even with a flat rate for a possible check
4. Meet the deadlines - avoid late payment penalties and interest
5. Use legal optimizations - depreciation, distribution of income, timing of expenses

For larger portfolios, we recommend working with a tax advisor. The investment in professional assistance will quickly pay off in the form of an optimized tax liability and peace of mind in the event of an audit.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.

> Czech tax clarification: Rental-tax classification, filing thresholds, rates, deductions, advances and social or health contributions depend on the actual activity, services, tax year and taxpayer. Passive rent is generally considered under § 9, while accommodation with services may fall under § 7; property count or stay length alone is not decisive. Check the current Czech Financial Administration guidance.