NEW RULES FOR TAXATION OF REAL ESTATE INCOME

We wish to alert you to a draft law, published on 24 Aug 2018, which seeks to amend the Personal Income Tax Act, etc.

The proposed law would change the treatment of income from real estate:

  • The so-called housing relief will be available for 3 instead of 2 years. This is a tax exemption on income from sale of one real property, and it is applicable on condition the income is spent on taxpayer's own housing needs (e.g. purchase, refurbishment) related to another real property.
  • The housing relief will be available also to those taxpayers who spend money on their housing needs in a property they do not yet own, on condition the title passes to them before the due date for settling the relief.
  • There will be different rules for computation of the period which must pass for the taxpayer to be entitled to exempt the income from sale of real estate regardless of how he used the proceeds of the sale:
  • In the case of sale of an inherited property, the period will be 5 years from the end of the calendar year in which the property was originally acquired by the deceased (currently, this is the year in which it was aquired by the heir).
  • In the case of sale after cessation of community matrimonial regime, the period will be 5 years from the end of the calendar year in which the real estate was acquired as community property of the spouses (currently, this is the year in which it was acquired as a result of cessation of the regime).

The draft proposes that the changes become effective as of 1 January 2019.

If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant or our office.

Doradztwo Podatkowe WTS&SAJA Sp. z o.o.

Bałtyk Building, 13th floor

ul. Roosevelta 22

60-829 Poznań

tel. (+48) 61 643 45 50

Warsaw Office

Central Tower, 22nd floor

Al. Jerozolimskie 81

02-001 Warszawa

This Newsletter is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.

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