Buy-to-let in Prague: costs, returns and risks

The pitch for buy-to-let is simple: the tenant pays the mortgage, and the owner keeps the flat. It works when the numbers allow it and fails quietly when they do not. A landlord rarely discovers the failure on the day of purchase. It shows up in the second year, when the first refixation, a long vacancy or a boiler replacement arrives together.

This guide builds a realistic annual statement for a rented flat, step by step, and lists the risks that the statement does not show. Every figure is hypothetical. We take no view on where prices or rents will go, and we quote no market yields. Our separate article on rental yields in Prague explains gross and net yield on a different example.

The hypothetical flat

Suppose a flat costs CZK 4,000,000. The buyer borrows CZK 2,800,000, which is 70% of the price, over 25 years at an assumed rate of 5%, and puts in CZK 1,200,000 of own money plus CZK 80,000 of purchase costs (lawyer, cadastre fees, valuation, any agent). The flat lets for CZK 18,000 a month.

On these numbers, the landlord adds about CZK 28,000 from other income each year to carry the flat. About CZK 57,700 of the instalments reduces the debt, so the owner's net worth in the flat rises by roughly CZK 29,000 before price movement and tax. The investment is not losing money, but it is not paying for itself. The owner is converting monthly cash into equity.

That outcome moves with small changes. At a hypothetical 4% the instalments fall to about CZK 177,400 a year and the shortfall shrinks to about CZK 9,400; the rent still does not quite carry the loan. At 6% they rise to about CZK 216,500 and the shortfall widens to about CZK 48,500. A vacancy of three months instead of one costs another CZK 36,000. This is why yield alone is a poor guide, and why borrowing works against you when the net yield is below the interest rate.

What the central bank says about investment loans

The general ČNB recommendations cap the loan-to-value at 80%, or 90% for applicants under 36. For investment mortgages, meaning a loan on a rental property or on a third or further property, the central bank recommends tighter limits from 1 April 2026: a loan-to-value of 70% and a debt-to-income limit of 7 (as of 2026; check ČNB for the definitions and any change). Banks apply their own policies on top. The result is that a buy-to-let needs more of the owner's own money than a home you live in. See how much deposit you need for the owner-occupier arithmetic. Our guide to mortgage application shows the file banks ask for.

Tax: on the rent and on the exit

Rental income of a private owner is taxed as income under § 9, with either actual expenses or a flat rate of 30%, capped at CZK 600,000; no social or health insurance is due on this kind of income (as of 2026; check the Financial Administration). If you use actual expenses, mortgage interest is deductible as a cost of the rental in the usual way, and the flat rate gives it up. Which route is lower depends on your figures. See the tax on rental income for the mechanics.

The exit is a separate tax question. A property sold by an individual is exempt from income tax if held for ten years when acquired from 2021 (five if acquired earlier), or if the seller lived in it for two years immediately before the sale, with a reinvestment route in some cases. A flat bought only to let does not usually qualify through residence, so a sale inside the holding period can be taxed on the gain (as of 2026; check the Financial Administration). Our explainer on the tax on income from a property sale sets out the tests, and the property sale calculator on Hypoteky.com models what you keep after selling.

The risks the statement does not show

Vacancy and tenant quality. A tenant who leaves, pays late or damages the flat changes the year. The deposit is capped at three months' rent and has to be returned, so it is only a cushion (as of 2026; check the Ministry for Regional Development). A tenant on an open-ended lease can leave with three months' notice, while a landlord can end it only on legal grounds.

Interest rates. The rate is fixed for the fixation period, not for the loan. At refixation the instalment can rise sharply. Our guide to fixation periods explains the choice, and refinancing the exit if a better offer exists.

Rule changes. Tax, tenancy and short-term letting rules have changed over the past years and may change again. The ČNB limits themselves moved during 2026. A model that works under today's rules should still work with a tighter set.

Concentration and liquidity. One flat is one building, one street and one tenant. A flat is also slow to sell compared with a financial asset, and selling costs real money; see what it costs to sell a flat in Prague.

Building risk. A major repair or a special levy by the owners' association is the owner's cost. Ask for the building's repair history and fund before you buy; see service charges and building funds.

Choosing what to buy

Small flats in well-connected districts tend to attract the widest pool of tenants, but they also tend to turn over faster. New-build flats come with a warranty and lower early repair costs, and some developers sell with the rental in mind. Our guides to new-build or resale and studio apartments compare segments.

Run the numbers before you offer. Use the rental yield calculator on Hypoteky.com for the yield and the ROI and IRR calculator on Hypoteky.com to include financing and exit assumptions.

Frequently asked questions

Frequently asked questions

Can the rent pay the whole mortgage?

Sometimes. In our hypothetical case it does not, because the net yield is below the interest rate. Compute your own numbers with a downside case.

Are the mortgage rules different for a rental flat?

Yes. From 1 April 2026 the central bank recommends tighter limits for investment mortgages: 70% loan-to-value and a debt-to-income limit of 7 (check ČNB).

Do I pay tax when I sell a rented flat?

Possibly. A flat held under ten years (for property acquired from 2021) is generally taxable on the gain unless another exemption applies. Check the Financial Administration.

Is a new-build better for letting?

It can lower early repair costs, but price, location and rent matter more. Compare actual flats.

A practical next step

Rewrite the table above with a real flat, a real quote from a bank and a rent from an agent who has let in the building. Then change the rate by two points and the vacancy to three months. If the result still works, you have a plan. If not, you have saved yourself the lesson.

This is a general explainer, not legal, tax or mortgage advice.