Settling tax on rental income from a flat

Although letting a flat is not a popular investment in Poland, more and more people are choosing it. Letting a property means you have to settle the tax on it. Find out how to deal with this so as to minimise costs.

How to settle the tax

Letting a flat generates revenue. So tax has to be paid on it. You can choose one of two ways of settling it. The first option is settlement under the general rules according to the tax scale, and the second is flat-rate tax (ryczałt) on recorded revenue. The flat rate is 8.5 per cent, while under the tax scale the rate is 18 per cent or 32 per cent, depending on the amount. Flat-rate settlement takes only revenue into account. It is not possible to deduct costs such as depreciation of the flat or its renovation. Settlement under the general rules takes account of both revenue and expenses.

Settling tax on rental income from a flat – choose an option

If we decide to let a flat, we must report it to the tax office. All documents must be submitted to the tax office for the place of residence of the landlord. The location of the property being let is not taken into account. We must submit a declaration on the choice of form of taxation, a declaration that the tax will be settled by one of the spouses, and the annual PIT-28 return.

READ ALSO – FLAT-RATE TAX ON LETTING A FLAT

Which form of taxation to choose?

The simplest form of taxation is flat-rate settlement. We do not have to record expenses, and the percentage rate does not change. It is not always a favourable solution for the taxpayer, however. Settling under the general rules can be worthwhile when the costs of depreciation and renovation of the flat are high. This option, however, requires more careful record-keeping. In every case you must remember to make advance income tax payments. Making advance payments on income from letting a flat is no different from doing so in other cases.