Property rental has recently become a quite popular (and profitable) source of income. This entails the obligation to pay property rental tax. It’s important to note that the recent tax changes (Polish Deal 1.0 and 2.0) have affected the incomes derived from renting. What should you currently be mindful of regarding the income tax on rent?
Property rental tax – private rental
Starting from 2023, individuals renting property privately (i.e., not as part of a business activity) are subject to taxing their income from this source only with a lump sum for recorded revenues. According to Article 9a, paragraph 6 of the PIT Act, there is no possibility to choose another form of taxation in this regard.
In this case, one should consider the advantages and disadvantages of applying a lump sum. Of particular note is the inability to deduct the costs of obtaining income. We have written more extensively on this topic in one of our previous posts.
How much will the property rental tax be?
The amount of lump-sum income tax in this case depends on the annual income from rent.
| Lump sum rate | Gross income |
| 8,5% | Revenues up to PLN 100k |
| 12,5% | Revenues exceeding PLN 100k |
Important note!
If you are settling tax for private leasing and also run a business (active VAT payer), be sure to provide this information to your accounting! Despite the fact that this service is generally exempt from VAT (Article 43, paragraph 1, item 36 of the VAT Act), it still needs to be reported in the appropriate declaration!
Property rental tax – business rental
One could say that not much has changed in the same scope for entrepreneurs. They still have the option to choose different forms of taxation, but…
… starting from 2023, acquired/constructed (residential) properties can no longer be depreciated! The prohibition arises from Article 22c, item 2 of the PIT Act and Article 16c, item 2a of the CIT Act. The year 2022 was transitional in this regard. Individuals who purchased/built residential properties before January 1, 2022, could benefit from depreciation (until the end of 2022). From the beginning of 2023, there is no such possibility.
What does this mean in practice?
The taxpayer-entrepreneur theoretically has the option to choose a flat tax or a progressive tax scale, allowing for “deducting” costs. However, since, in practice, the taxpayer cannot include the value of the property itself among these “costs,” it ceases to be profitable in most cases.
In principle, we cannot include all the expenses that would be part of the initial value of a fixed asset as costs. This primarily concerns the costs of acquiring the property, but also, among other things, notary fees, tax fees, interest, or commissions (in the case of a loan). The situation is similar regarding the costs of renovation carried out before the premises are put into use. While these costs can theoretically be deducted, it is only when selling the property, not during its rental!
Of course, this raises numerous questions and concerns. Doubts arise about which costs cannot be deducted (at the rental stage), but also the question of what happens to expenses incurred after the premises are put into use.
How can we help?
If, after reading the article, you have questions or concerns, contact us! Describe your situation in detail and the doubts that concern you. We will analyze your case, and during individual consultations, we will explain any questions or concerns, as well as discuss the topic of possibilities to limit tax risks. In more complicated cases, we assist in preparing a request for interpretation to the National Tax Administration!
If you have questions about property rental, visit www.outsourced.pl .
