Holding Property in Slovakia
- Real estate transfer tax has been completely abolished since January 1 2005.
- 19% income tax is applicable on profits earned by the sale of real estate. Apart from this there is no specific capital gains tax.
- 19% VAT is applicable for real estate transactions made within 5 years after the official completion of the construction. After this period no VAT is applicable. Transfer of land is also subject to 19% VAT.
- Generally VAT is not applicable for renting of real estate. But in some cases the leaser can decide to charge 19 % VAT on the lease.
- A real estate tax on individuals and companies owning real estate and land is levied in Slovakia. The tax liability depends on the area in square meters, the number of floors, the nature and purpose of the building and its geographical location.
- Rental income is taxed as ordinary income and is subject to the standard tax rate of 19%. Interest on loans provided to finance real estate, expenses and property related cost like management fees and insurance can be deducted from the taxable rental income.
- Real estate is subject to tax depreciation on an annual basis with the exception of land, which cannot be depreciated. Buildings are depreciated over 20 years using either a straight line or reducing balance method of tax depreciation. In other words although the property value keeps increasing, the owner can depreciate the entire cost of the building for tax purposes and end up paying much less tax. Tax losses can be carried forward for a period of 5 years.
Jun4.