Buying Property in Poland : Costs
Kasha, Monday, 11 November 2013
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
In Poland, the property sale transaction costs are typically wholly borne by the buyer. The costs will vary depending on whether the purchased property is bought directly from the real estate developer (so called primary market property) or if it was previously used (secondary market property).
Primary market property will typically entail transaction costs equivalent to 4.5% of the property sales price. This will include:
1% of the property sales price payable at the notary’s and comprising: notary’s fees (progressive fees based on the property sales price), payment for certified copies of the notarial acts, fees for entering new owners and mortgage information in the Polish Mortgage and Land Registry and the 23% VAT tax on the fees.
3,5% of the property sales price payable to the real estate agent, which comprises the negotiated commission (usually up to 3% of the property value) and the 23% VAT tax. Note that one does not have to use a real estate agent in the purchase or sales process, in which case this cost could be eliminated.
Secondary market property will entail transaction costs equivalent to 6.5% of the property sales price, including the notary and realtor fees as listed above and a:
2% civil law transactions tax: The tax is payable immediately at the notary’s when the final sales agreement is signed.
The buyer will be liable to pay two taxes on the purchased property for the entire length of the property ownership. The first one is the real estate tax (podatek od nieruchomości), which will need to be paid starting in the month following the purchase. This tax is payable to the local commune government and is calculated based on the type of property (commercial vs. residential) and the property’s usable area. Since each commune sets its own tax rate, the taxes will vary by region, however they cannot exceed a national ceiling set by the Polish Finance Ministry. Currently, the national ceiling for residential property is PLN 0,70 per square meter per year and for commercial property is PLN 21.94 per square meter per year. This means that the maximum yearly property tax for a 100 square meter residential and commercial property would amount to PLN 70 (EUR 17) and PLN 2194 (EUR 525), respectively.
In addition to the real estate property tax, homeowners need to pay a yearly tax for the perpetual lease of the land hosting the real estate property (the so called użytkowanie wieczyste). The tax typically amounts to 1% of the land value per year.
The seller of the property will be liable for paying a capital gains tax if they sell the property sooner than five years from initial purchase. The capital gains will be calculated as the difference between the sales price and the purchase price reduced by all expenses connected to renovating or increasing the value of the property. The tax will be payable as part of the income tax statement, which in Poland is due by April 30 of the following year.
There is one important exception to the capital gains tax. If the income from the sale is used within the next two years to buy another property for the taxpayers own residential purposes (e.g. a new apartment, house or a building lot for a future home), then the taxpayer is released from paying the capital gains tax.
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
In Poland, the property sale transaction costs are typically wholly borne by the buyer. The costs will vary depending on whether the purchased property is bought directly from the real estate developer (so called primary market property) or if it was previously used (secondary market property).
Primary market property will typically entail transaction costs equivalent to 4.5% of the property sales price. This will include:
1% of the property sales price payable at the notary’s and comprising: notary’s fees (progressive fees based on the property sales price), payment for certified copies of the notarial acts, fees for entering new owners and mortgage information in the Polish Mortgage and Land Registry and the 23% VAT tax on the fees.
3,5% of the property sales price payable to the real estate agent, which comprises the negotiated commission (usually up to 3% of the property value) and the 23% VAT tax. Note that one does not have to use a real estate agent in the purchase or sales process, in which case this cost could be eliminated.
Secondary market property will entail transaction costs equivalent to 6.5% of the property sales price, including the notary and realtor fees as listed above and a:
2% civil law transactions tax: The tax is payable immediately at the notary’s when the final sales agreement is signed.
The buyer will be liable to pay two taxes on the purchased property for the entire length of the property ownership. The first one is the real estate tax (podatek od nieruchomości), which will need to be paid starting in the month following the purchase. This tax is payable to the local commune government and is calculated based on the type of property (commercial vs. residential) and the property’s usable area. Since each commune sets its own tax rate, the taxes will vary by region, however they cannot exceed a national ceiling set by the Polish Finance Ministry. Currently, the national ceiling for residential property is PLN 0,70 per square meter per year and for commercial property is PLN 21.94 per square meter per year. This means that the maximum yearly property tax for a 100 square meter residential and commercial property would amount to PLN 70 (EUR 17) and PLN 2194 (EUR 525), respectively.
In addition to the real estate property tax, homeowners need to pay a yearly tax for the perpetual lease of the land hosting the real estate property (the so called użytkowanie wieczyste). The tax typically amounts to 1% of the land value per year.
The seller of the property will be liable for paying a capital gains tax if they sell the property sooner than five years from initial purchase. The capital gains will be calculated as the difference between the sales price and the purchase price reduced by all expenses connected to renovating or increasing the value of the property. The tax will be payable as part of the income tax statement, which in Poland is due by April 30 of the following year.
There is one important exception to the capital gains tax. If the income from the sale is used within the next two years to buy another property for the taxpayers own residential purposes (e.g. a new apartment, house or a building lot for a future home), then the taxpayer is released from paying the capital gains tax.
All types of property for sale in Poland by private sellers and estate agents. Find your villa, farmhouse or apartment in the Mazowieckie, Malopolskie, Pomorskie or Dolnoslaskie region.
While contracting a real estate agent to assist with buying or selling property in Poland is not necessary, it may be the preferable solution for
foreigners as well as all those who are not knowledgeable about the local market, who want to save time and those who want to have additional insurance
against dishonest sellers.