Mortgage Interest Deduction on Your 2026 Tax Return for the Self-Employed
Are you paying off a mortgage on the flat or house you live in while also running a business as self-employed? Then you likely qualify for one of the few genuinely valuable tax deductions available: you can deduct interest paid on your housing loan from your tax base. Over a year, that can mean savings of more than 20,000 Kč. There are several conditions, though, and one major trap awaits entrepreneurs on the flat-rate tax scheme. In this article, we cover the limits for 2026, who does and doesn't qualify, what documents you need, and how to claim the deduction step by step.
TL;DR: the essentials in five points
- Interest on a loan for your own housing can be deducted from your tax base under §15(3) and (4) of Act No. 586/1992 Coll.
- The limit is 150,000 Kč a year for loans used to acquire a housing need from 1 January 2021 onward, and 300,000 Kč for older loans.
- The limit applies to the whole household, not per person or per loan.
- The deduction can be claimed by a self-employed person on actual or flat-rate expenses, as long as they file a tax return. A self-employed person on the flat-rate tax scheme does not qualify.
- You need an annual confirmation from your bank of interest paid, plus proof of ownership and use of the property.
What exactly you're deducting, and under which law
Interest on a housing loan falls under what are known as non-taxable items of the tax base. These are governed by §15 of Act No. 586/1992 Coll., on Income Tax. The interest deduction specifically is addressed in §15(3) and (4).
The principle is simple: you deduct from your annual tax base the amount you actually paid that year in interest on a mortgage loan or a building savings loan. This is not a tax credit, but a reduction of the tax base. That means the real saving equals 15 percent of the deducted amount (the personal income tax rate).
An important distinction: you only deduct the interest, not the principal repayment. Every monthly mortgage instalment consists partly of principal (the debt itself) and partly of interest (the cost of borrowing the money). The deduction applies solely to the interest component, which your bank states in the annual confirmation.
What is the deduction limit in 2026
The maximum amount of interest you can deduct in a year depends on when you used the loan to acquire your housing need. The cutoff date is 1 January 2021, when a legislative change lowering the limit took effect.
📊Limits for deducting housing loan interest
The key word is acquisition. What matters is not just the date you signed the loan agreement, but the moment the housing need was acquired. For example, if you bought a flat and drew down a mortgage in 2020, the higher limit of 300,000 Kč applies to you in subsequent repayment years too, including 2026. For mortgages on new housing arranged in recent years, expect the 150,000 Kč limit.
The limit is per household, not per person
The limit of 150,000 or 300,000 Kč applies to the entire jointly managed household, regardless of how many loans you have or how many people are named on the agreement. If more than one person from the same household claims the deduction (typically spouses), the sum of all their deductions must not exceed the limit. So neither spouse can deduct the full 150,000 Kč from the same loan.
One more practical note about the first and last year of repayment: if you only paid interest for part of the year (for example, you drew down the mortgage from July), the limit is reduced proportionally, by one twelfth for each month in which you paid interest.
Who qualifies for the deduction and what conditions must be met
The right to the deduction doesn't arise automatically for everyone repaying any kind of loan. The law ties the deduction to what's known as a housing need and its use. The conditions under §15(3) and (4) can be summarised as follows:
- The loan is used to acquire a housing need. This includes buying a flat or house, construction, buying land for building, renovation, or settling property relations (for example, paying out a share in a divorce or inheritance).
- You own the property. You must be the owner or co-owner of the property the loan relates to.
- You use the property as your own permanent home. Or as the permanent home of your spouse, children, parents, or grandparents of either spouse.
It follows that the deduction does not apply to: a loan for a recreational property (a holiday cottage), a loan for a property acquired for rental purposes, or a flat used solely for business. What matters is actual use as a home, not just the stated purpose in the agreement.
Watch out: flat-rate expenses yes, flat-rate tax no
This is a common point of confusion, since the two terms sound similar. The difference is fundamental:
- A self-employed person on flat-rate expenses (claiming expenses as a percentage of income, i.e. 40, 60, or 80 percent) who files a standard tax return: does qualify. Non-taxable items are deducted from the tax base on the return regardless of whether you claim expenses as a flat rate or from actual records.
- A self-employed person on the flat-rate tax scheme (paying a single monthly flat payment and not filing a tax return): does not qualify. The flat-rate tax scheme allows no deductions or non-taxable items whatsoever, because no tax return is filed on which to claim them. Anyone on the flat-rate scheme cannot deduct interest, even retroactively.
So if you have a significant mortgage and are on the flat-rate tax scheme, it's worth calculating whether it pays off to stay on that scheme or switch to a standard tax return, where you can claim the interest deduction (along with other credits and deductions).
What documents you need
To claim the deduction, prepare the following:
- Annual confirmation of interest paid. Your bank or building society sends this after the end of the calendar year, usually in January or February, often directly into your online banking. This is the key document, stating the exact amount of interest paid for the year.
- The loan agreement. This proves the purpose of the loan (acquiring a housing need).
- Proof of ownership and use of the property. Typically an extract from the land register, or proof of permanent residence or other evidence that you use the property as your home under §15(4).
You attach the bank's confirmation as an annex to your tax return. Keep the other documents in case the tax office requests them during an audit.
How to claim the deduction step by step
📋Procedure for the self-employed on a tax return
You can file your return electronically through the MOJE daně portal (mojedane.gov.cz), via data mailbox, or on paper at the tax office. If you are legally required to have a data mailbox (which applies to all self-employed individuals), you must file electronically.
Example saving: how much you actually save
Example: self-employed on flat-rate expenses with a mortgage
Situation: A tradesperson claims flat-rate expenses of 80 percent and files a standard tax return. In 2025, they paid 58,000 Kč in interest on the mortgage for their family house (drawn down in 2022).
- The loan was used to acquire the housing need in 2022, so the 150,000 Kč limit applies.
- The interest paid, 58,000 Kč, is under the limit, so the full amount is deducted.
- Reduction of the tax base: 58,000 Kč.
- Tax saving (15%): 8,700 Kč.
If the same entrepreneur were on the flat-rate tax scheme, they could not claim the deduction and would miss out on the 8,700 Kč saving.
For comparison: on an older loan from 2019 with higher interest, say 90,000 Kč a year, a deduction of 90,000 Kč would mean a tax saving of 13,500 Kč. And if annual interest exceeded the 300,000 Kč limit, at most 300,000 Kč could be deducted, for a saving of 45,000 Kč.
Common mistakes to avoid
- Deducting the whole instalment instead of just the interest. The principal cannot be deducted. Use only the interest amount stated on the bank's confirmation.
- Applying the limit per person. Spouses cannot each deduct the full limit from the same loan. The limit is per household.
- Claiming the deduction for a rental or recreational property. It only applies to your own home.
- Relying on the deduction while on the flat-rate tax scheme. In this scheme, the deduction cannot be claimed, not even retroactively. Consider whether the flat-rate tax scheme is worthwhile for you given your mortgage.
- Forgetting the bank's confirmation. Without it, you cannot substantiate the deduction. Check your online banking early in the year.
Conclusion
The mortgage interest deduction is one of the most valuable tax breaks available to self-employed people who own and live in a property financed by a mortgage. You can reduce your tax base by up to 150,000 Kč a year (300,000 Kč for older loans) and save thousands, even tens of thousands, of Kč in tax. The requirements are a standard tax return, proof of ownership and use of the property as your home, and an annual confirmation from your bank. Just watch out for the flat-rate tax scheme trap, where the deduction cannot be claimed at all.
The foundation for a correctly filed return is keeping your documents in order throughout the year. When your income, expenses, and confirmations are organised and easy to find, claiming the interest deduction takes just a few minutes. DokladBot helps you keep your documents in one place and ready for your tax return. Try it out and see how easy record keeping can be.
Sources
- Act No. 586/1992 Coll., on Income Tax, §15 (non-taxable items of the tax base)
- Financial Administration: information on the change to the aggregate interest limit
- Financial Administration: MOJE daně portal
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