Senate Approves Extension of Interest Tax Deduction to Housing Cooperative Loans

The Senate of the Czech Republic has approved a law that proposes extending the possibility of deducting interest on mortgage loans from the tax base of individuals to interest on loans from housing cooperatives. 

Until now, taxpayers have only been able to deduct interest on their own mortgage loans used to finance housing needs. However, it will now also be possible to claim a tax deduction for interest on loans arranged by housing associations for the purpose of acquiring, constructing or renovating property.

Individuals will thus be able to deduct a proportionate part of the interest incurred by the cooperative for a loan related to the property in which they have the right of use of the flat. This legislative novelty thus brings tax advantages also for those taxpayers who use the cooperative form of housing and strengthens the equal position of the various forms of financing housing needs in terms of tax deductibility of interest.

The proposed legislative change should come into force on 1 January 2026, which means that taxpayers will be able to claim the extended interest deduction already for the 2026 tax year.

At the moment, all that remains is the President's signature, which represents a rather formal conclusion of the entire legislative process.

If you would like more information on this issue, please do not hesitate to contact the tax team at PKF APOGEO Tax for a more detailed explanation and individual consultation.