Evidence from abroad shows that higher property taxes often lead to lower prices in the housing market.
What if higher property tax did not make housing more expensive, but cheaper and thereby made it easier to buy a home in Slovakia? It sounds counter-intuitive, but experience from several advanced economies suggests that this may be the case. Property prices are rising faster than incomes, and the question of housing affordability is becoming increasingly urgent. Property tax can also be part of the answer.
In Slovakia, recurrent tax on residential property is calculated mainly on the basis of floor area. The statutory basic tax rate for flats and buildings is €0.033 per m², but the final amount is determined by municipalities. For example, the current tax rate on flats ranges from €1.20 to €1.35 per m² in Bratislava, depending on the zone, and from €1.143 to €1.270 per m² in Košice. For a 70-square-metre flat, this translates into an annual tax of approximately €84 to €95 in Bratislava and €80 to €89 in Košice, before any exemptions or discounts.
While Slovakia taxes property mainly according to its size, many other countries use the value of the property as the tax base. For this reason, headline tax rates are not directly comparable across countries.
