Closing costs: taxes and fees when buying

Transfer tax: rate and the correct tax base

Law No. 6999 governs real estate transfer tax. The base rate is 1.5%. However, the decisive factor is not always merely the figure written into the purchase contract: the statutory tax base must be verified, including the registered fiscal value. Its calculation should be confirmed by a notary or tax advisor for the specific conveyance.

Do not attempt to reduce the budget by artificially undervaluing the deed. In addition to tax exposure, this creates discrepancies between the actual payment, bank documentation, and figures for future resale. Furthermore, in the case of a company share transfer, the simplistic conclusion that 'nothing is transferred, hence there is no tax' does not apply: a lawyer must assess the indirect transfer regulations.

What belongs in a written breakdown

Notary and registration costs should not be lumped into an ambiguous 'legal fee'. Request an itemised breakdown detailing the calculation base, rate, applicable VAT, payee, and apportionment between the parties. Establish whether the fee covers only the transfer deed or also independent legal due diligence.

• Transfer tax, individual fiscal stamps, and registration fees.
• Notary fees and, separately, the fees of your own legal counsel.
• Escrow fees, bank transfers, and currency conversion.
• Surveyor, technical property inspection, translations, or power of attorney notarisation.
• Settlement of outstanding arrears, condominium/HOA fees, and handover costs.

Who pays what: do not rely on custom

The apportionment of costs between buyer and seller must be set out in the contract. Market custom provides no guarantee for your transaction. In a developer offering, the term 'closing costs' may encompass different items compared to a secondary residential resale.

Compare also whether the quoted price includes furnishings, parking spaces, air conditioning, utility connections, and documentation. Surcharges for missing items are not transfer tax, but they nevertheless increase the actual acquisition cost. In off-plan construction, incorporate legally and technically monitored milestones.

Sample calculation, not an offer

Based on a purely illustrative tax base of USD 300,000, the 1.5% rate corresponds to USD 4,500. This calculation illustrates only the transfer tax, not the total acquisition costs. The actual tax base and payment in the relevant currency must be confirmed by a professional.

If an investor decides to set aside, for instance, 4% of the purchase price for all ancillary expenses, this represents a budgetary assumption, not a statutory rate or a guarantee of an adequate reserve. It must be benchmarked against an itemised quote from a notary, independent lawyer, and escrow provider.

Separate one-off and ongoing costs

Transfer tax is payable as a consequence of the transaction. Property tax, any solidarity luxury tax, insurance, property management, and condominium fees belong to annual operations. Conflating these categories creates a distorted yield comparison.

When using finance, account for loan interest and arrangement fees separately. For an investor funding the purchase from Czech crowns, add the foreign exchange risk between reservation and the final settlement in USD. Compare all items in a single currency and as of the same date.

Questions before signing

• On what valuation is the tax calculation based?
• Does the legal fee include independent due diligence?
• Who pays to discharge existing encumbrances and rectify potential registration defects?
• Does the breakdown include all services along with applicable taxes?
• What expenses will be incurred even if I legitimately withdraw from the purchase?