The Differences Between Standard Apartments and Atelier Apartments in the Czech Republic
An Atelier is a built space officially designated for commercial use, such as a shop or business. In practice, however, it is often a standard apartment that doesn’t meet the legal standards for residential use – usually due to insufficient natural light or noise levels exceeding residential regulations. Despite that, many Atelier apartments are still used for residential purposes.
These units are typically located within residential buildings and are often marketed as apartments due to their layout and location. However, the “Atelier” classification often results in a lower purchase price, making them attractive for investors. Still, there are both advantages and disadvantages to consider before buying one.
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Taxes
VAT
Because an Atelier is not officially considered a residential unit, different tax rules apply. In the Czech Republic, the VAT rate for commercial properties is 21%, whereas for residential properties it is only 15%. Since Ateliers are categorized as commercial, they are subject to the higher rate of 21% VAT.
Property Acquisition Tax
When purchasing a second-hand property in the Czech Republic, buyers must pay a 4% acquisition tax. Although newly built residential units are exempt from this tax, new Atelier units are not – buyers will still have to pay the full 4%.
Permanent Residency Registration
One important consideration is that an Atelier cannot be registered as a permanent residential address. This may not affect foreign investors, but it could matter for Czech citizens seeking permanent residency or benefits such as discounted residential parking in their area.
Mortgages and Financing
If you take out a mortgage on an Atelier apartment, you cannot deduct interest for personal residential use. However, if the property is used for rental or commercial purposes, mortgage-related expenses may be reported as tax-deductible.
Attractive Pricing
In terms of layout, structure, and design, an Atelier apartment may be virtually identical to regular units in the same building. Yet its price can be up to 10% lower. In some cases, these units offer similar rental income, making the return on investment especially appealing.
Summary
Atelier apartments present a mix of pros and cons. In some cases, the limitations are minimal and the price advantage makes them an excellent investment. In others, their classification may restrict usage or tax benefits. The key is working with a professional who understands the Czech real estate market and can assess the true value and yield of the property.
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