Technical improvement (technické zhodnocení)

What counts is the change made, not the invoice wording

Under the law, reconstruction changes the purpose or technical parameters. Modernisation expands equipment or usability. Completed extensions, additions and structural alterations can also count as technical improvement. If the relevant expenses for an individual asset exceed 80,000 Kč in total over the tax period, the law treats them as technical improvement. You can also opt for this treatment below the threshold. Income Tax Act, § 33.

This doesn't mean every 90,000 Kč repair is automatically a technical improvement. The nature of the work comes first. Conversely, several invoices under 80,000 Kč don't necessarily amount to several separate minor expenses.

Why the distinction matters

If you claim actual expenses, you generally can't deduct a technical improvement all at once. Once completed and put into use, it increases the asset's tax base value and is written off gradually through depreciation. With the 30% flat-rate deduction, it can't be claimed on top. § 29(3) and § 9(5).

An illustrative example: a new bathroom is built in a part of the flat where there wasn't one before. The related construction work costs 50,000 Kč and the installation 45,000 Kč. Two invoices from one project don't mean two separate thresholds. Together, that's 95,000 Kč. Restoring the original condition after a defect, on the other hand, calls for a different assessment.

Before a major alteration, keep photos of the original condition, a description of the changes and an itemised budget. A generic “flat renovation” line on an invoice is weak support for a reliable tax classification. Nor does the tax label alone determine whether the tenant or you pay for the work.