Real Estate - Sales and Rental

If You decide to undertake an investment in the estate property or to make any arrangements for Your property, please turn to TAKTAX in order to structure and optimize the transaction. We shall assist you through all the legal requirements and tax settlements. Please find below a brief description of taxation of income on sale of property purchased after year 2006 and basic information concerning taxation of rental income.

Taxation of sale of property

The sale of property constitutes one of the sources of income in accordance with the PIT. However, in case the sale of a property takes place after 5 years from the purchase the income is not subject to taxation.

In case the property is sold before the 5 year period elapses, the income is subject to taxation. The income shall amount to the price indicated in the sale agreement, less the cost of sale. The taxable costs shall amount to the documented cost of purchase of the property increased by the expenses incurred during the possession of property, which increased its value.

The applicable tax rate amounts to 19%. The income on sale of property does not sum up with other sources of income.

The profit from sale of property is exempt from taxation in case it is spent on the taxpayer’s own housing purposes.

In accordance with the Polish regulations rental income not constituting a part of business activity can be taxed in accordance with two methods: progression or flat rate.

Progressive taxation method allows for deduction of costs from the income and as a result decreasing the tax base. The tax rate applied to income (revenue minus costs) up to 85,528 PLN amounts to 18%; income exceeding this amount is taxed with 32%.

In case of a flat rate taxation method all received amounts – gross profit – constitute a tax base, since no costs are deductible. Also amounts received as a refund of incurred expenses constitute an income of the owner. The tax rate amounts to 8.5% of the tax base (gross receipt). In order to apply the flat rate taxation method the taxpayer should inform the tax office about his choice until January 20th of a given tax year.