a) Why offering a property through a real estate agency?
A real estate agency has much greater possibilities to advertise the property. Most of the time, an agency also maintains a database of clients, which increases the chance to find a potential customer. A real estate agency also has access to special real estate servers where an ordinary citizen is not permitted to input his/her property. Last but not least, a real estate agency also has its own solicitors available who prepare all contractual documents.
b) Is it better to offer a property through one real estate agency or multiple ones?
It is always better to commission one’s property for sale or rent only to one real estate agency. This way the agency has a greater possibility to advertise exclusively registered properties and therefore it can find an interested party faster. The agency also dedicates a higher attention to such properties as opposed to the others (non-exclusive ones). In the event you commission your property to multiple real estate agencies, it may put a potentially interested party off. The reason is that he/she can find the given property in advertisements a few times and often with different prices. The more real estate agencies offer the property, the more this property will seem to the interested party as apparently unsellable – because the owner offers it through so many real estate agencies.
c) Is it better to conclude an exclusive or non-exclusive agreement with a real estate agency?
An exclusive agreement is an agreement between the property owner and real estate agency which will arrange the sale. The agreement means that the real estate agency is able to invest more into presentations of the property in the media and must provide the interested party with the most accurate information. Furthermore, there is a possibility to offer this property also to clients of other real estate agencies, under identical conditions. For the owner this means that he/she will always deal with one responsible partner and will not have to communicate and waste time with more agents. Last but not least, it means really comprehensive service, more advantages and services for the seller. Based on our experience we can say that in case of properties being sold exclusively, the sale price tends to be higher and sale faster. If the owner concludes a non-exclusive agreement and the property is offered by multiple real estate agencies, the resulting effect for the end customer is rather off-putting as he/she can find the given property advertised a few times, with different descriptions, different prices; in addition, the more agencies offer the property, the more the property will seem to the interested party as unsellable.
d) I want to sell a property but don’t know how much for. Can you advise me?
Determining a market price of a property is not easy; however, it’s extremely important. If the sale price is too low, the seller loses a part of his/her money. If it’s too high, the sale is dragging disproportionately and it’s necessary to reduce the price, which can have a negative impact. The property market price depends on many factors (especially a location, transportation links, location attractiveness, infrastructure but also property condition, fittings and accessories and many others). Don’t hesitate and contact us with a specific question on: http://lexxus.cz/kontakt/; we will be able to specify the price of your property based on its inspection.
e) What is a joint ownership share?
An asset, therefore also a property, can be owned by more owners. A joint ownership then represents a level of how co-owners share rights and obligations resulting from a joint ownership of one common thing (for example, half or three fifth share in an asset). A size of shares is then decisive when deciding on handling the common asset and a decision regarding this common asset must be approved by an absolute majority defined according to shares, i.e. over 50 %.
f) What is a proposal to register a title of ownership?
A proposal to register a title of ownership is generally a proposal to commence proceedings related to registering a title of ownership (agreement of a property purchase), chattel mortgage (a contract with the bank providing the mortgage), rights corresponding to an easement or pre-emptive rights submitted to the Land Registry, possibly a proposal to delete such title. The proceeding regarding registration permission commences on the day of the delivery of a written proposal of the proceeding participants (or one of them) to the Land Registry.
g) Does the agreement about a sale of a property in joint ownership of a married couple have to be signed by both husband and wife?
Yes, sale of the property in joint ownership of a married couple belongs basically among acts exceeding standard administration of such assets and therefore, consent of both husband and wife is necessary. The Civil Code does not require, however, the purchase agreement to be signed by both husband and wife; nevertheless, the married couple must agree to its conclusion, otherwise it is invalid. In order to avoid possible doubts about the existence of the consent of both husband and wife in future, it is therefore more appropriate for the contract to be signed by both or potentially, for the husband, who will not be signing the agreement, to confirm his consent with the agreement conclusion in writing.
h) How can it be verified that there is a free access to the property on sale?
In case of a house purchase it is necessary to verify whether also the plot, on which the house is built, as well as the land around the house, are a part of the purchase. From the geometric plan, which can be obtained from the Land Registry, it is then necessary to identify whether the plot is adjacent to a public road, possibly whether access is secured through an easement of a path.
i) How long does it take to make an entry in the Land Registry since submitting the proposal?
The Cadastral Office registers any new ownership title or change in or termination of an ownership title or another ownership title by entering it in the Land Registry only based on the legally effective decision of the Cadastral Office about the approval of the registration. The registration must be decided on by the Cadastral Office within 30 days according to administrative rules, in more complicated cases within 60 days. The deadline to enter the title into the Land Registry is, according to Section § 51 Para. 1 Letter a) of Cadastral Notice, within 30 days since the decision on the registration approval comes into force and effect. The entry must be made within 30 days after receiving a decision by the state body or another document confirming or verifying legal relations. The Cadastral Office must make an entry in the Land Registry or cancel it within 30 days since the delivery of the document confirming the entry in the Land Registry or its erasure [see Section 5 Para. 3 Letter c) of the Cadastral Act. Entries based on a court ruling about ordering execution and ruling about securing assets in criminal proceedings or other entries if stipulated by a special statutory instrument (Section 51 Para. 4 Cadastral Notice) are made immediately. A change of any other data in the Land Registry must be made by the Cadastral Office in the Land Registry within 60 days since the delivery of the document which confirms the change or based on which the change to the Land Registry is made [see Section 51 Para. 3 Cadastral Notice].
j) How is property tax paid?
Property tax is paid by the person who is, on 1.1. of the given year, the owner of the property. A tax return is filed only for the first time and it need to be filed by 31.1. of the corresponding year; subsequently, you typically receive postal orders by 31.5. However, the payment needs to be watched as the finance office does not always send out postal orders (it is not its legal obligation). If, by 31 December of the year when the proposal to register an ownership title into the Land Registry was submitted it is not approved, the new owner is obligated to file a tax return in the following year at the latest by the end of the third month following the month in which the entry of the ownership title was made to the Land Registry.
k) Who pays tax on a property transfer?
The seller as a payer of tax on a property transfer is obligated to file a tax return regarding tax on a property transfer to the appropriate local finance office, at the latest by the end of the third month following the month in which the entry of the ownership title was made in the Land Registry (a property transfer to a new owner). Have the tax return confirmed by the financial office (a filling stamp and signature of a responsible person) on a copy of the tax return which you will make for this purpose.
Tax return also consists of the original of or officially certified copy of the purchase agreement with a clause about the permission to register by a Cadastral Office (will be sent by the Cadastral Office to the seller and buyer to their permanent residence address or to the address stated as a postal address) and an expert assessment (appraisal) about the price identified based on a special legal regulation. If you don’t have the expert assessment, contact the expert who is authorised to carry out the assessment or your LEXXUS dealer can recommend one. The property transfer tax is payable within the same aforementioned deadline stipulated for filling a tax return. The tax return is filed by all sellers; if sellers are a husband and wife then each of them files his/her own tax return.
l) Does income tax need to be paid when selling a property?
Tax on income when selling a property is paid by the seller in case the original purchase price, based on which he/she acquired the property, is lower than the current price, which the property is being sold for. The basis for the tax is then the difference between the two purchase prices. Tax is 15% and higher, depending on the income. An income from a property sale is included in an annual tax return on income together with other incomes which the tax payer had in the given year (e.g. salary, business revenue, letting properties revenue, etc.). As the tax return on income is filed once a year, a few months can pass between the sale and payment of tax.
Exemption from income tax from the property sale applies in the following cases:
- the seller was living (and it can be proved) in the property at least for 2 years just before the sale (it isn’t necessary to have a permanent residence, usually a statutory declaration suffices)
- the seller owned the property for at least 5 years
- the seller has a permanent residence there of less than 2 years or owns a property for less than 5 years but the acquired income will be used to fund his/her own living within 1 year
- in case this is about a sale of properties, apartments or commercial premises acquired as part of inheritance from a testator who was a direct relative or a husband (wife), five years will be shortened by the time during which the property was demonstrably in the ownership of the testator or testators provided the property was acquired by gradual inheriting in a direct line or though a husband (wife). This means the following for you: if the heir, from whom you want to buy a property, can prove that the property was owned by his/her predecessor for the period of longer than 5 years then he/she is exempt from taxation. It must be a direct heir to the testator or a husband.
m) How do I change my residence?
It suffices to register at the new address (relevant local office); cancellation of registration will be done automatically. Subsequently, the new permanent residence needs to be communicated to other institutions (bank, financial office, medical insurance company, etc.). If you, after signing the purchase agreement, change the residence to the purchased apartment, it is necessary to inform the Cadastral Office about it as well. You can fill in a form on http://www.cuzk.cz – section “forms”, file - “Notification about change of owner’s information...” and to send it, without a tax stamp, to the Cadastral Office.
If you wish to receive post at your new address, it is necessary to arrange post redirection in the relevant post office.
n) How do I secure the new property?
The buyer should (if the bank didn’t arrange that as part of a mortgage) arrange insurance of the property and its contents. It is important to have third party property insurance in case of accidents, e.g. heating, water or fire, etc. Insurance needs to be arranged before the ownership title (purchase agreement) is registered at the Land Registry or be done on the day of the handover. It is standard to change the lock at the entrance door (insurance companies often require it); in case of gas appliances, it is advisable to arrange for an initial revision (especially in case of gas boilers).
o) What’s good to know about energy rating labels?
According to the law it is necessary to secure energy rating labels in case of new developments, significant refurbishments; in case of administrative, apartment and family houses this applies only when they are being sold or let. Energy prices are rising and the rating is to prevent consumers from buying energy expensive developments. Even if the buyer buys a property without a rating label, he/she can request it from the seller additionally as the seller is obligated to provide it.
The rating card must be placed visibly only in public buildings, it does not apply to apartment developments. The rating, or indicators of energy efficiency which it contains, must be on all information and advertising materials from 1 January 2013 when selling an apartment and from 1 January 2016 when letting it. If you don’t have the energy efficiency label, you can incur a fine of up to 100,000 CZK.