An exchange agreement is a purchase agreement with payment in kind: each party is the seller of the plot they give and the buyer of the plot they receive. Ownership of both plots passes through cadastral registration under one agreement. A difference in value is settled by a balancing payment. For tax, both parties transfer property; income is the value of the plot received plus any balancing payment. The five-year ownership exemption is assessed separately for each party, and a new period begins for the received plot.
Exchanging land between relatives can consolidate gardens, provide road access or divide an inheritance without anyone paying money. Legally, it is straightforward. Mistakes tend to occur in two areas: balancing payments and tax.
Each party is both seller and buyer
The provisions governing purchase agreements apply, as appropriate, to an agreement under which the parties exchange one asset for another. Each party is treated as the seller of the asset they give in exchange and the buyer of the asset they receive.
— Section 611 of the Civil Code, unofficial translation
Each party is therefore liable for defects in the plot they give and has a buyer’s rights over the plot they receive. A property agreement must be written and contain what the cadastre requires: parcel identification, areas, land types and shares (Section 42(2) of Act No. 162/1995 Coll.). Both parties’ signatures must be certified because both are transferors (subsection (3)). If only parts of parcels are exchanged, a survey plan must first separate them, and that plan becomes an annex to the agreement.
Balancing payments and value
Plots often differ in size and value. A balancing payment settles the difference. The agreement specifies its amount and due date and remains an exchange agreement. If the values differ substantially and no balancing payment is agreed, part of the transaction may constitute a gift, with all the associated consequences, including a possible claim for its return. An expert valuation is not mandatory, but the value of the received plot for tax purposes is based on the price normally used at the place and time of performance (Section 2(c) of Act No. 595/2003 Coll.). Having evidence of the value is therefore worthwhile.
Encumbrances and pre-emption rights
Neither security rights nor easements end through an exchange. Security remains effective against the acquirer (Section 151h(1) of the Civil Code), so examine both parties’ title sheets before signing. If you exchange a co-ownership share, the other co-owners have a pre-emption right unless the transfer is to a close person (Section 140). A direct-line relative, sibling or spouse qualifies (Section 116); a cousin does not automatically qualify. The law does not regulate how pre-emption rights are exercised in an exchange, and practice is inconsistent. The safer option is a written declaration from the co-owners before signing that they will not exercise the right.
Cadastral registration
Ownership of both plots arises through constitutive registration (Section 28(2) of Act No. 162/1995 Coll.). Both transfers are submitted in one application based on one agreement. The administrative fee is charged per application, rather than per plot, and is lower for electronic filing. Until the cadastre decides, the agreement binds the parties but they are not yet owners. See when do I become the owner of a property?.
Income tax on an exchange
For tax purposes, both parties transfer property. Each party’s income is the value of the plot received plus any balancing payment, classified as other income from the transfer of property ownership (Section 8(1)(b) of Act No. 595/2003 Coll.). Subject to the conditions in Section 8(5), the deductible expense is the price for which you acquired your plot. For gifted land, the treatment depends on whether the donor’s income from a sale at the time of the gift would have been exempt: if so, the value at the time of the gift determined under Section 25 is used; if not, the donor’s ascertainable acquisition cost is used. For inherited land, the expense is determined separately under Sections 8(5) and 25, generally by reference to the value established in the inheritance proceedings. The exemption must, however, be considered first: income from a property sale is exempt once 5 years have passed since acquisition (Section 9(1)(a)). For land inherited in the direct line, the deceased’s ownership period also counts (point (b)). The period is assessed separately for each party and each plot, and starts afresh for the plot received. We are not tax advisers; have your particular situation calculated before signing. We discuss the context in tax on an individual’s property sale.
How we can help
We prepare an exchange agreement covering balancing payments, declarations about encumbrances and pre-emption rights. Our agreements also specify who files the registration application and by when, who pays the fee, and what happens if registration is refused. We handle filing through our cadastral registration application service. If parcels first need to be divided or combined, our land subdivision and consolidation service follows.
This answer provides general information on the law as at 10 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
