New tax relief: Interest deduction for cooperative housing too!

The Chamber of Deputies is currently debating a bill that could significantly affect tax deductions related to housing. This bill was introduced on March 5, 2025 during second reading and seeks to extend the deductibility of interest on housing loans to housing association loans.

This legislative change could provide significant tax relief for members of housing cooperatives and promote the affordability of cooperative housing. However, it is important to monitor the further development of this proposal and prepare for any changes in tax obligations.

What is the current legislation?

According to the current wording of the Income Tax Act, individuals can deduct interest on loans from building savings, mortgage loans or loans granted by a bank or building society from the tax base if they are used to finance their housing needs.

In the case of cooperative housing, members of housing cooperatives often pay an annuity. This includes interest on the loan taken out by the cooperative for the acquisition or renovation of the property. Until now, however, individuals have not been able to deduct this interest from their tax base on their tax return.

What will the proposed change bring?

The proposed amendment would allow members of housing cooperatives to deduct a proportionate amount of interest on the cooperative's loan that corresponds to their share.

The conditions for claiming this deduction include.

• Membership in a housing cooperative: The taxpayer must be a member of a housing association.
• Payment of interest: The taxpayer must pay interest on the housing association loan.
• Use of the dwelling: The dwelling must be used for the permanent residence of the taxpayer or his close relatives. 

The other conditions and the maximum deduction limit for the tax year of CZK 150,000 remain unchanged.

The amendment is expected to take effect on 1 January 2026, which means that if approved, taxpayers will be able to claim these deductions for the first time for the 2026 tax year.

Want to find out if you will be able to claim the deduction for interest on a cooperative apartment? Contact our tax team to find out more!