Selling a flat, house or land? Find out when you must pay income tax on the sale of real estate, when the income is exempt, which expenses can be claimed and what applies to real estate acquired by inheritance or gift.
When is income from the sale of real estate taxed
The taxation of income from the sale of real estate is governed by Act No. 595/2003 Coll. on Income Tax. As a general rule, if a natural person sells real estate and earns income from it, the income is taxable unless one of the exemptions under Section 9 of that Act applies.
Typical examples where the income is taxed are:
- the sale of real estate shortly after its purchase (e.g. after 2 years),
- the sale of an investment property that was included in the seller’s business assets.
When the income is exempt – the general rule
Under Section 9(1)(a) of the Income Tax Act, income from the sale of real estate is exempt from tax if more than 5 years have elapsed between its acquisition and its sale. This is the so-called 5-year holding test.
This five-year holding test is calculated from the date of acquisition of ownership – most often from the date on which the entry of the ownership right in the Land Register under the acquisition contract was approved.
If the seller has owned the real estate for more than 5 years, they do not pay income tax and do not file a tax return for this income, as the income is exempt from tax.
NOTE: There is an exception to this rule as well, namely if the real estate was included in the seller’s business assets. In that case, the exemption applies only after 5 years have elapsed since it was removed from the business assets.
In addition to meeting the general 5-year test, there are other specific exceptions under which income from the sale of real estate is exempt from tax, which, however, require specific statutory conditions to be met.
Sale of real estate acquired by inheritance
If the seller sells real estate that they inherited, special rules apply:
- In the case of inheritance in the direct line (e.g. from parents or grandparents) or from a spouse, the period of ownership of the deceased from whom the seller inherited is also counted towards the seller’s period of ownership.
- So if, for example, a parent owned a house for more than 5 years, the heir may sell the property tax-free immediately after acquiring it (they do not have to wait 5 years from inheriting the property for the income from the sale to be tax-exempt).
- However, in the case of inheritance in the collateral line (e.g. from a sibling, uncle, etc.), the heir is not automatically exempt from tax on the sale, even if the deceased owned the real estate for more than 5 years.
If income from the sale of real estate acquired by inheritance was not exempt from income tax at the time of its acquisition, the income from the sale may become exempt only after the heir themselves meets the 5-year holding test, i.e. after 5 years have elapsed since they inherited the property.
If the heir as seller is not exempt from tax, they may claim, as an expense in the tax return on the sale, the general (market) value of the real estate stated in the resolution on inheritance.
Sale of real estate acquired by gift
In the case of a gift, the donee’s income from the sale is exempt from tax only after the standard 5-year holding test has been met, i.e. after 5 years have elapsed from the date of acquisition of the real estate by gift.
Here, too, it is important to find out how long the donor from whom the donee acquired the property owned it, since this has a fundamental impact on which expenses the donee can claim if they decide to sell the property before the holding test has been met.
If, at the time of the gift, the donor already met the conditions for exemption of income from a possible sale from income tax, the donee could claim as a tax-deductible expense the general value of the real estate as at the date of the gift, which is usually evidenced by an expert opinion. So, if the donee sold the gifted property at its general (market) price or at a lower price, their tax expense would cover the entire income and their tax liability would be zero.
If, however, at the time of the gift the donor did not yet meet the conditions for exemption of income from a possible sale, the donee selling before the holding test has been met could claim as a tax expense only the acquisition price that the donor paid for the property in the past. The donor’s acquisition price may be considerably lower than the general value of the property at the time of the gift (as property values generally rise every year). It is therefore highly likely that the donee will have a tax liability in such a case, unless the property is sold at a price equal to or lower than the donor’s acquisition price.
Which expenses can be claimed when taxing the income
If a tax liability arises, the seller may reduce the tax base by provable expenses related to the sale, for example:
- the purchase price at which they acquired the real estate,
- the costs of technical improvement, renovation or repair,
- administrative and notarial fees, expert opinions, real estate agency commission,
- real estate transfer tax paid abroad (in the case of a sale with a so-called foreign element, if this tax paid abroad is claimed in the tax return).
The Financial Administration of the Slovak Republic recommends supporting these expenses with invoices, contracts or other documents.
When a tax return must be filed
A tax return must be filed if:
• the seller has earned taxable income from the sale of real estate that is not exempt, and at the same time
• their total taxable income exceeded EUR 2,876.90 per year (amount for 2025).
The deadline for filing a type B tax return is 31 March of the following year (with the possibility of requesting an extension of three months).
If the income is exempt under Section 9 of the Income Tax Act, no tax return is filed at all.
NOTE: Even if the tax-deductible expenses incurred to generate the income exceed or equal the income from the sale of real estate, the seller is obliged to declare the income from the sale of real estate in the tax return for the relevant period, in which they also claim all the relevant expenses reducing their tax base to zero.
Practical tips to conclude
✅ Keep all documents related to the acquisition and improvement of the property for at least 5 years – in particular acquisition contracts, decisions from inheritance proceedings, contracts with real estate agencies, documents relating to repairs and renovations of the property, expert opinions, etc.
✅ Check the date of acquisition on the title deed (ownership certificate) so that you can determine exactly when the 5 years elapse. It should be stressed that the decisive moment is the acquisition of ownership, not the conclusion of the contract. In the case of inheritance, it is the moment of the deceased’s death, not the date of issue of the certificate of inheritance.
✅ In the case of inheritance or a gift, find out how long the original owner owned the property – the income may be exempt without the need for a tax return, or your deductible expenses may cover the entire income and thus reduce your tax liability to zero.
💬 Not sure whether you have a tax liability when selling real estate?
Our law firm will help you assess your specific situation and determine whether you are obliged to declare the income in a tax return and pay income tax. Do not hesitate to contact us for an initial consultation.
