Tax relief for cooperative members: Loan interest is now tax deductible

From January 1, 2026, the tax-free portions of the tax base for individuals will be expanded. It will now be possible to deduct interest on loans attributable to a share in a housing cooperative, under precisely defined conditions, which we already mentioned briefly in our article dated March 20, 2025.

What will be newly deductible:

An amount equal to the interest attributable to the taxpayer's share in a housing cooperative, paid by the taxpayer during the tax period, will be deducted from the tax base. This amount applies to interest on a loan that:

• was taken out by the housing cooperative (not directly by a member),
• was provided by a building society or bank (e.g., in the form of a mortgage loan),

Conditions for claiming the deduction:

1. The deduction is only possible in a tax period during which the taxpayer:
   - used the housing for their own permanent residence or for the permanent residence of close relatives (spouse, parents, children, grandparents).
   - was a member of the cooperative.
   - If membership was established during the year, it is sufficient that the taxpayer was a member at the end of the tax period.
2. If the apartment is used for business or rental purposes, only a proportionate part of the interest for the months when this was not the case can be deducted.
3. In the case of multiple co-owners of a share (e.g., spouses), the deduction can be claimed either by one person in full or by each of them in equal shares.

Limits and control mechanisms:

• The maximum deduction for the tax period of CZK 150,000 per year remains unchanged.
• The above limit may only be reduced if the property is used for rental or business purposes (or in any other way than to satisfy one's own housing needs) for part of the year. If interest is paid only for part of the year, a proportional reduction is required – max. CZK 12,500 for each month.
• If membership is terminated during the year, it is not possible to deduct interest from the tax base, even on a proportional basis.

Documentation and proof:

To claim the deduction, the taxpayer must provide:

• a loan agreement concluded by the housing cooperative,
• annual confirmation of the taxpayer's membership from the cooperative,
• confirmation from the cooperative of the amount of interest attributable to the taxpayer's share for the past calendar year,
• confirmation from the bank or building society of the amount of interest paid by the housing cooperative.

If you would like more information or are unsure how to proceed, please contact our tax team.