This article will help you figure out how to buy an apartment in Poland for an individual person. Consider the mandatory taxation when you will make this transaction.
First of all, we will determine the tax residency status. Foreigners who are non-residents have a limited number of tax liabilities. This means that only those incomes that foreigners receive in Poland are taxed in Poland. This taxation applies to income from:
- work performed in Poland on the basis of official, labor and cooperative labor contracts, regardless of the place of wage payment;
- business activities carried out in Poland;
- real estate located in Poland (this also applies to the sale of real estate).
Until the foreigner transfers his “center of life interests” to Poland, he will have the status of non-resident in Poland, in light of taxation. The acquisition of real estate in Poland by a foreigner will not change his tax status (that is, he remains a non-resident). Legal basis: Art. 3, paragraph 1-2b of the Law of July 26, 1991 on personal income tax - j. Law of 2010, No. 51, paragraph 307, as amended.
With regard to taxation in the field of real estate purchase, this transaction is taxed on PCC. In accordance with art. 1 clause 4 of the Law, civil transactions are taxed if their subject is property located on the territory of Poland, or property rights are drawn up on the territory of Poland.
The purchase of real estate in the secondary market (from a specific owner of an individual person) bears a tax liability only for civil transactions in the amount of 2% of the market value of the property (PCC).
This tax is calculated and paid directly by the notary who draws up the contract, and the tax is paid by the buyer. PCC tax is collected and paid by a notary who prepares a notarial deed. In accordance with Art. 10 of the Law on Legal Services “Notaries” are payers of tax on civil law transactions committed in the form of a notarial deed.
It should be taken into account that when buying real estate directly from the builder, no tax on civil transactions is levied. However, the buyer pays 8% or 23% VAT. If we buy an apartment with an area of up to 150 square meters, then the tax is 8%, and for an apartment more than 150 square meters - 23%. In fact, it is more profitable to buy, in this case, real estate from the developer to a company, because the VAT paid will not be lost and it can be refunded.
Property tax and agricultural tax are components of wealth tax. Income from real estate is perceived as profit from the sale of real estate or profit from rent. This is also confirmed by Art. 6 clause 3 of the above law, which describes that this provision applies to income received from direct use for the intended purpose of real estate (for example, rent) by individuals.
In accordance with Art. 30th paragraph 1 of the Law on personal income tax on income from the sale of real estate, personal income tax is 19%. This amount is the difference between the income from the sale of real estate and the purchase price. Also, the cost of buying a property includes expenses determined in accordance with Art. 22 paragraph 6c and 6d (in some cases, additionally increases by the amount of depreciation referred to in paragraph 1 of Article 22h) made on the sold property or real estate rights. The tax on the sale of real estate requires that the property is sold within a period of less than 5 years from the date of purchase. If more than 5 years have passed from the date of acquisition of the property at the time of sale, this transaction is not taxed.
Summing up, we can say that when selling before January 1, 2022, profits from the sale of an apartment are taxed in Poland (19% of the amount of the difference between buying and selling) and a corresponding application is submitted to the tax authority in the form PIT-39. The amount of standard property tax depends on:
- land area, buildings and additional parts,
- tax rates that apply in the municipality.
The municipality sets tax rates that cannot be higher than the maximum rates (based on the Law). You can check local rates and information at the municipal office or on the website. Do not calculate the tax by yourself. Every year, the municipality publishes tax information.
Below you can find a simulation of the cost of acquiring an apartment in Warsaw costs 600 thousand PLN:
- preparation of a preliminary contract up to PLN 1585 + VAT;
- preparation of the final contract up to PLN 1585 + VAT;
- notarized copies of about 200 zlotys for the preliminary contract and about 400 zlotys + VAT for the final contract;
- the cost of notarized copies for the cadastral register of about 200 zlotys + VAT.
Tax on the purchase of real estate from natural person (PCC) = 2% = 12,000 PLN
Judicial payment for amendments to the heading 2 in register - 200 PLN.
Judicial payment for amendments to headings 3 and 4 (information about the mortgage - only if applicable) - 600 PLN.
It is also very likely that a sworn translator will be needed at meetings if a representative of one of the sides does not speak Polish. The average cost of a translation service is 300 PLN + VAT for a 2 hour block of translation.
TOTAL: about 18 052.10 PLN gross, including all taxes and fees.
If you want to buy an apartment in Poland, we are happy to help and answer for all of your questions!