Is it possible to reduce the tax on real estate sold before the five-year period? What can be done to minimize the tax? Is there a way to adjust the purchase costs of real estate for inflation (inflation adjustment)? Recently, an article containing a comment by Piotr Sekulski, PhD on this topic was published in Rzeczpospolita.
The regulations in this area are clear and allow for the possibility of inflation adjustment or – more specific – adjusting the purchase costs of real estate for inflation.
Article 22, Paragraphs 6c and 6f of the PIT Act
6c. The acquisition costs related to the sale, (…), constitute documented acquisition costs or documented production costs, increased by documented expenditures that increased the value of the assets, incurred during their possession.
6f. The acquisition or production costs referred to in Paragraph 6c are increased annually, starting from the year following the year in which the acquisition or production of the sold assets took place, up to the year preceding the tax year in which the sale took place, by the rate corresponding to the consumer goods and services price index for the first three quarters of the tax year in relation to the same period of the previous year, announced by the President of the Central Statistical Office in the Official Gazette of the Republic of Poland “Monitor Polski.”
In the article available at this link you can find a lot of interesting information on whether it is possible to adjust the purchase costs of real estate for inflation.
tax advisor Piotr Sekulski, PhD
“In recent years, we have experienced high inflation, so adjusting costs could result in significant tax savings (…) Let’s assume that the taxpayer bought an apartment in 2022. The acquisition costs (which include not only the purchase price but also notary fees, PCC, or brokerage commission) amounted to 500,000 PLN. In 2024, they sold the property for 700,000 PLN. They can increase the costs by the 2023 inflation rate, which is 13.2%, or 66,000 PLN (500,000 PLN x 13.2%). This will save them 12,540 PLN in tax.”
tax advisor Piotr Sekulski, PhD
“Taxpayers who want to argue for higher costs could potentially argue that inflation is calculated year to year. Referring to the price from several years ago does not, therefore, reflect the actual increase. However, I have not encountered any case where someone has challenged the tax authority’s position in court.”
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