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There is no difference in taxes for local and foreign property owners in Poland. Restrictions on the transaction exist only in relation to private houses, land plots and non-residential real estate, where you need to get permission from the Ministry of Justice of Poland or buy on behalf of a Polish company, in which all the founders may be foreigners.
The owner of a property in Poland must pay an annual property ownership tax. The amount of bids is determined by each voivodeship independently and depends on the type and area of the property.
The law defines the maximum annual rates per square meter for the year: 0.85 zlotys (€0.19) for residential, 24.84 zlotys (€5.43) for commercial premises and housing for daily rent. The highest rates are usually in the voivodeship capitals, the lowest for residential real estate are in Koszalin and Tychy (0.6 zloty or €0.13).
The real estate tax rate for medical institutions and sanatoriums is 5.06 zlotys (€1.11).
For land plots under residential buildings - 0.52 zlotys (€0.11). If we are talking about an apartment complex, the area of the plot is distributed among all the apartments in the building, so the tax in recalculation for each owner is insignificant.
For land plots under commercial premises - 0.99 zlotys (€0.22).
In Poland, you can even buy a lake as a property. In this case, the annual tax rate will be 4.99 zlotys (€1.09).
How to pay property tax? The list of those who do not have to pay property tax is very short. It includes agricultural land, as well as land and objects that belong to international organizations or local governments.
The amount required for payment is determined by the end of January of the year following the reporting year, and is paid either immediately (if the amount is less than €21.9), or in installments (once a quarter or a month) to the account of local governments. Most often, the payment amount is divided into four parts with the following deadline dates: March 15, May 15, September 15, November 15. In the event of a delay, the municipality may impose a penalty.
Utilities in Poland are provided by the standard European model: everything that happens in the house is controlled not by state services, but by cooperatives or owner associations. These administrative bodies collect a fixed monthly fee that covers the care of the common areas.
What monthly expenses are borne by the owner of a Polish apartment?
You may think that a lot of money (especially to Poland) is spent on the payment of the cooperative/partnership. But if you look at how the adjacent territories are landscaped, the question disappears by itself:
Feature 1. Once a year, the management company must report to the residents. And if they are not satisfied with its work, they have the right to change the organization.
Feature 2. The management company can take out loans for a house on very favorable terms, receive subsidies for various energy-saving programs or for the reconstruction of historical buildings. Therefore, cooperation with it is more than justified.
Feature 3. In Poland, there are houses with no general management organization. Everything that happens inside the house (cleaning entrances, replacing light bulbs, etc.) is a responsibility of the residents, everything outside (garbage collection, care of the house territory) relies on the city services. But even in such cases, residents often form a kind of partnership with the foreman and hire staff to clean, repair the elevator and other household needs if necessary.
Feature 4. If there are problems with the roof, the money for repairs is taken from the general repair fund, which is formed by contributions from all owners of apartments in the complex.
Feature 5. Old houses may have a problem: not all residents pay utility bills and repair fund contributions in a timely manner. This may be, for example, pensioners who have certain benefits. Therefore, when buying a home, you should pay attention to the composition of the neighbors.
How to pay for utilities in Poland? Most bills are paid directly from a bank account: you make the transaction each time manually or set up automatic deductions on specified dates. But if you have just arrived in the country and have not yet got an account in a local bank – there are other options:
Revenue. As of January 1, 2021, the minimum wage in Poland is 18.3 zlotys (€3.98) per hour, and the average monthly salary is €610 before taxes. The average income is at the level of €1,300 (including taxes). The Polish authorities raise salaries steadily, by 7-8% per year. According to the Ministry of Statistics, in 2020, the growth was 6.6%.
Salaries in the public sector are on average €87 higher than in the private sector, and novice professionals receive about 40% less than their experienced colleagues.
In the country, the level of income is highly dependent on the voivodeship. Real incomes are higher in Warsaw, as well as in large cities, the capitals of voivodeships. The eastern part of the country is characterized by lower wages than the west and south.
Housing. The most expensive place to rent a house in Warsaw. A single apartment in the city center without taking into account utility bills costs €600-650, outside the center - €450-500. Among the capitals of the voivodeships, the cheapest rental housing in Bygdoszche is €260-300 per month. In other major cities, the price tags are similar, only Wroclaw and Gdansk will be slightly more expensive, where a good apartment can be found for €400-470 per month.
In Poland, it is popular to rent a so-called "cavalier" (which is basically a studio apartment). This is an apartment for one person or a couple without children, which costs €180-250 per month, depending on the city. As a rule, this is a very small room with an area of 15-25 square meters. m with a kitchen and a bathroom.
Meal. Food costs in Poland are low, even when compared with southern Europe, not to mention the northern countries. For two people a month, €200-270 is enough, if you eat mainly at home. A bag of milk in the supermarket costs €0.6, bread – €0.5-0.7, a kilo of rice – €0.92, a dozen eggs - €1.92, a kilo of chicken fillet and beef - €4 and €8, respectively. For a kilogram of vegetables and fruits, you will have to pay an average of €0.6-1.5.
In an inexpensive restaurant, you can have a hearty lunch for €5-6, in Polish "canteens" - even cheaper, in the region of €3-4. A combo lunch at McDonalds will cost €4.8, but the country has enough national "fast food", so for this amount you can eat in a large number of establishments. A cup of cappuccino will cost €2-2. 5.
Transport. A transport card (travel card) costs around €25, a one-time ticket - €0.9. A liter of gasoline costs a little more than €1, for 1 km of a taxi ride you will have to pay about €0.7. To save on transport, use bicycles: in every Polish city there are many city parking lots where you can rent it. A trip lasting up to 20 minutes will be free, up to an hour - about €0.44-0.65.
Mobile communication in the country is inexpensive. For example, you will have to pay only €7 for a package with unlimited calls and SMS and 5 GB of Internet in the Plus network.
Other expenses. A subscription to a fitness club will cost around €25-30 per month, for a movie ticket you will have to pay €6.5. If you want to buy private insurance, prepare to give about €50-90 per month, depending on the package of services.
Profitability. Polish real estate is in demand among buyers from the expanses of the former USSR. According to local realtors, this popularity is due to a good yield of 4-10%, depending on the location and type of property. This is significantly higher than the deposit rates (up to 0.5% per annum) or the profit from bonds.
You need to add to the rental yield the profit from rising property prices, which are rising almost faster than anywhere else in the EU, even during the pandemic. This trend has been observed for many years. The increase in real estate prices is comparable to the increase in wages and is about 5% per year, does not depend on tourists or other categories of foreigners. More than 95% of apartments in the country are bought by Poles.
Taxes. Taxes on the rental of real estate are paid in Poland by about 700 thousand people, including both individuals and legal entities, for whom the rental of an object is part of the business.
To calculate the tax, you can use one of the following systems:
The choice of a particular tax system is voluntary. You do not need to warn the tax service in advance, it is enough to make a payment for the first month of the year or from the moment of renting out with the corresponding code in the purpose of payment (ryczałt is PIT-28). The amount due is paid in the same way as the annual property tax.
Management companies. The standard rate of management companies in Poland is 10% of rental income. The organization takes all the trouble to find tenants, control the payment of utilities, look after housing, resolve issues with the partnership or cooperative. Usually in Poland, tenants transfer monthly rent to the owner's account, and the owner pays for the services of the management company from his account.
Market trends. The Polish residential real estate market does not behave very clearly: in September last year the number of transactions significantly decreased, but by the end of October people began to actively buy real estate. Moreover, special attention was paid to the houses with a garden and a terrace. Meanwhile, prices have not fallen much, and in the segment of commercial properties, there is a stable increase in investment.
Taxes. The tax is paid on the difference between the purchase price and the sale price after selling the property. You can deduct all expenses for repairs, the purchase of built-in furniture, annual taxes, mortgage interest and other costs associated with the object from the amount of income. But you will need to provide all the receipts.
The rate depends on the period of ownership:
The income declaration must be submitted by the end of the year in which the transaction was concluded.
If the property is inherited or received as a gift by children and/or spouses, the property transfer tax will not have to be paid. But you need to take care of the documents in advance and submit an application to the tax service on the form SD-Z2. However, if we are talking about second-and third-degree relatives, this tax will be 7% and 12%, respectively.
Additional expenses. Polish law requires the involvement of a notary in the transaction. Its services cost 0.5-1.5% of the sale amount plus you will have to pay a real estate agency (2-4%) if the transaction goes through it, and not directly.
All transaction costs are borne by the buyer. The transfer of ownership tax (2%) also falls on the new owner. But if you buy an apartment on the primary market or from a VAT-paying company, this tax is not available.
Sometimes there is also no commission to the real estate agency in the primary market, because it is paid by the developer. At the same time, the price of the apartment for the buyer does not increase, cause the realtor acts as an external sales department for the developer.
Our editorial extends appreciation to Paweł Różycki, Head of the real estate agency Orzech Lux, for his help in preparing the article.
