Tax on the sale of a plot of land - what you should know about it

There are many property owners, or more precisely plot owners, who are thinking of selling them. If you are one of them, do not make such a decision hastily. Check whether the transaction will be profitable for you, taking into account the tax on the sale.

Selling a plot of land – tax

People selling a plot of land often do not realise that they will have to pay tax on the sale. Many believe that only the buyer will pay this tax. It is true that the buyer will have to pay it - it is called the civil law transactions tax (PCC) - but the seller must also remember to pay, and the amount is not as small as it may seem. The income tax on the sale of a plot of land is 19 per cent of the income obtained from selling the property. It is worth stressing here that the income tax is 19% of the income obtained from the sale, and not of the value of the whole transaction. So if the seller bought a plot for 200,000 PLN and then sold it for 250,000 PLN, they pay tax on the income obtained, which in this case is 50,000 PLN.

Tax liability on the sale of a plot of land

The tax liability on the sale of a plot of land arises under strictly defined conditions. All natural persons who sell a plot within 5 years of the date of acquiring it are obliged to pay it. People who came into possession of a plot through inheritance are also obliged to pay income tax. Some entities may be exempt from the obligation to pay income tax on the sale of a plot of land. In this case, however, specific conditions must be met. First of all, before the sale the plot must have been part of a farm, and the sale must not have caused the plot to lose its agricultural character. If either of these conditions is not met, the tax on the sale of the plot must be paid, unless 5 years have passed since the day it was acquired. Remember, however, that in this case the 5 years are counted from the end of the calendar year in which the plot was acquired.

Can income tax on the sale of a plot of land be avoided?

Income tax on the sale of a plot of land does not have to be paid if the income from the transaction is used for your own housing purposes. Such expenses include, for example, acquiring a residential building or a residential unit. They also include acquiring land for the construction of a residential building, and constructing, extending or adding a storey to such a building. That is not all, because housing purposes also include extending or adapting your own non-residential building or just a specific part of it. When selling a plot, you do not have to pay income tax if the amount you obtain from the sale is used to repay a loan or the interest on that loan. The last possibility is an exchange of property.