Czech Finance Minister proposes mortgage tax relief for youth

Czech Finance Minister Alena Schillerová has proposed increasing the tax deduction for mortgage interest payments by 50,000 CZK, starting next year. The measure is specifically targeted at individuals under the age of 36 who currently hold or are considering a mortgage.

Critics, including former Prime Minister and former Czech National Bank Governor Jiří Rusnok, have voiced strong opposition to the plan. Rusnok argued that such tax exemptions do not serve a reasonable purpose and may actually drive up housing prices by increasing demand in a market where supply is limited. He further noted that the benefit disproportionately favors middle- and high-income households rather than those in greatest need.

Analysis of the proposal suggests the actual financial impact varies based on income tax brackets. For those in the 15 percent tax bracket, the additional 50,000 CZK deduction would result in an annual tax saving of 7,500 CZK. For those in the 23 percent bracket, the savings could reach approximately 11,500 CZK. This comes amid rising mortgage interest rates in the Czech Republic, which reached an average of 5.79 percent in October.