Legal costs when selling a home in Poland
Each person who decides to sell real estate in Poland (home, flat or plot) must take into account the obligation to incur various types of costs. It should be borne in mind that these costs are incurred before the actual transaction, and thus before receiving payment for the property.
The largest tax burden on the person selling the property in Poland is the amount of tax that should be paid to the Tax Office. This tax is 19% on sales revenue – and thus is the difference between the amount of the sale of real estate and the amount of its purchase. Income from sale is subject to reduction by costs related to the renovation of a given real estate – while the costs of renovation, for example in the form of VAT invoices and bills, should be documented for the purposes of the Tax Office. Notary fees are also deductible.
The value of the tax to pay is best illustrated by an example.
Example
Jan Kowalski purchased the house in January 2017 for PLN 300,000.00, notary costs related to the purchase of the property amounted to PLN 8,000.00. Mr. Kowalski renovated the property he bought for PLN 45,000.00 (he has relevant bills for all expenses). In January 2018, he sold the property for PLN 400,000.00. How much does Mr. Kowalski’s tax have to be paid to the Tax Office?
tax base: PLN 400,000.00 – PLN 300,000.00 – PLN 45,000.00 – PLN 8,000.00 = PLN 47,000.00
tax to be paid: PLN 47 000.00 x 19% = PLN 8 930.00
Answer: Mr. Jak Kowalski will pay PLN 8 930.00 tax.
The tax is settled using the PIT 37 form.
Particularly noteworthy is the fact that the real estate tax is payable if between the date of sale of the real estate and the date of its purchase (the date of purchase or receipt of the inheritance / donation), it has not passed 5 years. This period counts from the year following the year after the acquisition of the property. For example, for a real estate received in a fall in February 2015, the time after which you can sell a property without having to pay tax will expire in 2021.
The Polish legal regulations give you the option of preventing the payment of tax if the amount from the sale of real estate is fully allocated within the next 2 tax years for housing purposes.
In addition to income tax, the home seller in Poland bears the costs associated with issuing a sales announcement. Currently, the most popular is placing an advertisement on the Internet. Internet websites charge fees of up to several hundred zlotys for inserting an advertisement. The sale of a house can also take place through qualified intermediaries who charge a commission of 2-5% of the transaction price for the sale of real estate.
The sale of real estate also includes expenses related to the resignation of telecommunications services or utilities – it should be remembered that contracts for the supply of electricity, Internet and telephone are concluded for a specified period. Their early termination requires the payment of contractual penalties.
In addition, optional costs may occur. Such costs are notarial costs related to the sale of real estate. In Poland, the buyer usually bears them, while Polish legal regulations do not specify who should bear these costs. The parties may agree that the seller bears the costs. Notary costs depend on the value of the property. However, it should be remembered that the rates set out in the Notary Act are the maximum rates – it is always worth negotiating with a notary public.
Each person (both a Pole and a foreigner) who plans to sell real estate in Poland should familiarize themselves with the planned costs that will have to be borne.