Significant amounts of income and expenses when buying and selling real estate determine their taxation as one of the main ones in personal finance. How to take into account income depending on the period of ownership of real estate, its acquisition under a loan agreement (mortgage), in the order of donation (inheritance), how to file a tax return, about these issues in the article below.

The general rule for taxing income from the sale of private real estate is period of ownership after purchase (construction).

• If more than 5 years have passed during the sale of real estate after its purchase (construction), the income from such a sale is not subject to personal income tax and is not declared.
• If less than 5 years have passed since the sale of real estate after its purchase (construction), the owner of the real estate is obliged to fill out a declaration on income received and expenses incurred and, if necessary, pay tax.

The term of ownership of real estate in 5 years is determined from January of the year following the year of its purchase (construction). For example, when buying a property in March 2017, 5 years expire after December 31, 2022. That is, when selling such real estate in 2023, a tax return is not filed and personal income tax is not paid.

If 5 years have not expired after the purchase (construction) of real estate, the following procedure for determining the taxable amount and tax upon its sale is applied:

1. The basis for calculating the tax is income, which is the difference between income from the sale of real estate and deductible expenses, increased by the amount of depreciation.

Income from the sale of real estate is defined as the difference between the sale price and the purchase price of real estate specified in the sales contracts (not less than the market value).

Deductible expenses are documented expenses that add value to the property while you own it, such as certain repairs, equipment, upgrades.

In the case of real estate received by way of inheritance (donation), documented expenses also include the amount of inheritance tax (donation).

2. A tax deduction is applied in the amount of expenses directed to own housing purposes:

* Expenses for own housing purposes can be in Poland, also in the countries of the European Union, the European Economic Area or the Swiss Confederation (in accordance with applicable international and tax agreements).

3. Depreciation is taken into account only if the property belongs to the cooperative ownership or is a residential building (house, premises). Depreciation can be written off if the following conditions are met in relation to the property:

• is owned or jointly owned by the taxpayer,
• the period of use exceeds one year,
• usable,
• used by the taxpayer for his/her business activities.

The depreciation eligibility ends in 2022 for buildings and residential premises purchased or constructed before January 1, 2022.

From January 1, 2023, depreciation on buildings and residential premises are not included in tax expenses.

Example. An apartment bought in 2019 for PLN 400,000 using loan in the amount of PLN 200,000 was sold in 2022 for a price of PLN 600,000. Repair costs that improved the condition of the property amounted to PLN 25,000. Expenses (legal, notary, agency) amounted to PLN 25,000. The owner of the apartment is considering two options in 2022: pay off the loan (mortgage) without buying real estate (for example, use of the apartment for rent in the future) or buy real estate in the amount of PLN 700,000 within 3 years.

Table - Calculation of personal income tax after the sale of real estate with a period of ownership of up to 5 years, zł.

* A loan (mortgage) can be used to purchase new real estate.

4. Completion and submission of the declaration, payment of tax.

When selling real estate with an ownership of less than 5 years, a declaration is submitted regardless of whether income is received, or losses incurred from such a sale.

The PIT-39 declaration is filled out with attachments, on the basis of which income tax in the amount of 19% is paid.

If in the previously submitted declaration for buying real estate in the next 3 years the purchase amount decreases or such a purchase does not occur, then an adjustment declaration is submitted and the due tax with interest is paid.

The PIT-39 declaration can be submitted electronically through the following websites: e-Deklaracje and Twój e-PIT. The declaration can also be submitted via the web service: e-pity.pl.

The PIT-39 declaration in paper form can be filed at the tax office or sent by post.

The PIT-39 declaration is filed between February 15 and April 30 of the year following the year in which taxable income from the sale of real estate is received. For income received in 2022, the declaration is submitted and the tax is paid before May 2, 2023.

More complete information on the taxation of income from the sale of real estate on the website of the Tax office and the web service for filling out personal income tax returns.

Provisions for the taxation of income from the sale of real estate on the basis of the law act: Ustawa z dnia 26 lipca 1991 r. o podatku dochodowym od osób fizycznych.

Taxation of income from commercial real estate occurs according to other rules.