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We were at opposite ends of the spectrum with my wife wanting a single family home or cottage and me looking at palaces and villas. We compromised on a 5000 sq. ft., 12-room villa built n 1864 by an Austrian industrialist. Its last private owner was a Bohemian baron who bought the villa for a summer and safety retreat for his family in 1941. The baron owned coal mines and had the necessary influence to do a complete renovation of the villa during the early years of World War II. Unfortunately, his efforts were almost undone during the communist era when neglect was the rule for homes of the rich. We bought the
villa when it was on its last leg. It had been converted and served
as a Kindergarten from 1950 to 1970. Then, it served as an
apartment house for communist supervisors until 1991 when it was vacated.
We paid $32,000 for the place. We could of bought it in 1991 for
$20,000 if we would have known it was for sale. What ensued was a
lot of renovation that cost another $32,000, but we ended up with a beautiful
place. The villa now provides us with a very nice two bedroom apartment,
a caretakers apartment, and two apartments for use in our bed and breakfast
business.
Why buy? Because Czech has never had fewer than 18 million tourists a year since its borders first opened in 1990. This is one and half times the number of people who live in Czech. The Dutch and Germans love Czech food and beer. With EU entry, they will be able to buy a nice cottage with garden in a peaceful Czech village for half of what they would pay for a tiny garden lot in their own country. What is best to buy? Your greatest success for the money will be either something large like a villa or a small cottage. Try to buy something built before World War II because the construction was of much better quality than during the communist period that followed. The larger cities and tourist sites are magnets for younger Czechs who are leaving their villages for better paying jobs. This leaves a lot of empty cottages and a few villas in the villages they have left behind them for a better future. In my village, there are 273 homes for a population of 550. A full 10 percent of these homes are now owned by retired or soon to retire Czechs from the larger cities. They are paying rock bottom prices for these homes and fixing them up. There are about 12 homes that are vacant because they are too big or they require more renovation. These vacant homes are priced from $10,000 to $30,000. Building materials are reasonable and skilled labor is a steal at $3.00 to $5.00 an hour. Where is the best place to buy? The best place is always the best location. Most of the best places were sold in the early 1990s. Now, they are too expensive with little chance for rapid growth in price. The real money now will be made from properties located 20 to 30 miles outside of cities like Bruno, Karlsbad and Prague. Why? Because with EU entry, the same Czechs who went to the big city will be earning enough money to buy a car and pay for the gas to commute from their former village. Of course by that time, their nice little cottage has probably doubled in value or been sold. The last big question is how do I buy? Right now there are two options available for foreigners who are not of czech ancestry. The first option is to establish a Czech business with a Czech partner. The partner can be in name only with you controlling all assets of your corporation. You will have to apply for a business license and have a minimum assets of 100,000 Czech Crowns or approximately $3000 in your business account. This money can be spent later as you please. With the business
license, you are qualified to obtain a long term visa that must be renewed
annually. Once you have the business license and visa, you can buy
all the cars and houses you like. It is highly recommended to use
a good lawyer that specializes in business and real
The property you buy can be deemed business essential, and all operational costs can be tax deductible from any profits you make from your business. Presently, property tax is very reasonable. I pay $30 a year on a property valued and insured for $150,000. Taxes are expected to double next year, but I think I will survive. When you buy a property, you will have to pay a property registration fee of about 5% percent of the property appraisal and not the sales price. The property appraisal fee is about 3 percent of the appraised value which is usually too high from my experience. When you sell this property, you are subject to all these same fees plus a 22 percent capital gains tax less any improvements you have made. The second option is what I call the Libertarian Option! It allows you to buy property without a business license, visa, appraisal, registration fees, property taxes or even capital gains tax when you resell your property. All you need is money and a likable personality. This is called ownership by a cooperative or druzstvo in Czech. It is normally used to buy apartments or possibly cottages. The drawback is you cannot buy land, only buildings, hence no property taxes. If you need land, you can lease or rent it very cheaply. Druzstvo works something like our condo system except there are no taxes involved. Like a condo you will have to pay a fee to support common areas and building maintenance. The big problem is finding cooperative property and then convincing cooperative members to accept you. Additionally, you must live by the bylaws established by the cooperative. Normally, Americans have few problems being accepted, but you will need a lot of help if you are a Russian. The option is your choice, but I recommend making haste in your selection. Some online real estate contacts are: Czech Reality
Ikano Properties
Czech's largest
English newspaper, The Prague Post
If you need
a nice place to stay while you are searching for real estate, try our place,
Villa
Favorite.
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