Income tax paid to the tax office on renting out a flat

Some people treat renting out a flat as an additional or main source of income. Getting started with this kind of arrangement can be tricky, however. You need to acquire knowledge not only of the property market, but also of formal matters. Do you have to pay income tax to the tax office on renting out a flat? Learn the details!

Renting out a flat – initial information

Renting out residential premises – a house or a flat – is very popular in Poland. We very often decide to do it after inheriting a flat or buying a new property. Letting provides a monthly income without constant effort. The landlord should draw up a tenancy agreement with the new tenant of the flat. People who do not run a business can also do this. Remember that almost any gain is subject to taxation. What tax must be paid when renting out a flat? You can choose the option that suits you.

Income tax on renting out a flat – types

For people who do not run a business, the obligation to pay tax on renting out a property applies to the amount received. In the case of a business, tax is paid only on the amount due.

Here are the available options:

• Tax according to the tax scale (skala podatkowa), i.e. under the general rulesHere the amount of tax is calculated as a percentage according to thresholds that depend on income. According to the scale it is 18 or 32%. This option works well when investing in the property. Renovations and alterations can be entered as costs of maintaining the premises, thereby reducing income. We recommend this method to people who focus on modernising the interior and make regular changes to the premises.
• Lump-sum tax (ryczałt) – in this case the lump-sum tax is 8.5%. Any tenancy agreement can be covered by this form of taxation, including an occasional tenancy (najem okazjonalny) agreement. Once made, the choice of this form of settlement applies for the following years of the agreement. This method is most often chosen by private individuals not connected with any business activity. It is worth mentioning that the lump-sum tax should be chosen by the twentieth day of the first month after the start of the tenancy.
• Flat tax (podatek liniowy)– this is an option when the rental is settled as part of a business activity. The rate is then 19%.

READ ALSO – THE RULES OF OCCASIONAL TENANCY

Which form of taxation should you choose?

The decision on the form of taxation is very important. It should be analysed carefully in order to choose the most advantageous option for yourself. Unfortunately, there is no single, universal method. Individual circumstances have a big influence here. A lot also depends on how we settle accounts with our tenants. The methods mentioned have their advantages and disadvantages. The lump-sum tax frees us from the obligation to keep a record of income, while the flat tax allows us to save quite a lot if we are actively investing in the flat.

SEE FLATS TO RENT IN KATOWICE