Extension of loan interest deduction: new tax relief for cooperative housing
The Senate of the Czech Republic approved a bill extending the possibility to deduct interest from the personal income tax base: apart from interest on mortgage loans, it will also be possible to deduct interest on housing cooperatives’ loans. An amending proposal to this provision was submitted during the deputies’ second reading of the bill. Individuals will now be able to deduct from their tax base a proportionate part of the loan interest paid by housing cooperatives.
This change is proposed to take effect on 1 January 2026, which means that taxpayers will be able to claim these deductions for the 2026 taxable period. The bill is now awaiting the president's signature, which should be just a formal step to complete the legislative process.
We informed you about this bill in our article of 6 March 2025. The extension of interest deduction represents a significant step towards greater housing affordability. It will encourage cooperative housing, which is often associated with the payment of annuities that include interest on loans that up until now could not be treated as an item deductible from the personal income tax base