Selling a flat to a family member and civil law transactions tax (PCC)

When selling a flat, you do not have to look far for buyers. Often your closest family is interested in acquiring the property. If you sell it to, for example, a brother or sister, can you avoid paying tax, as is the case with inheritances and gifts?

• Do relatives have to pay PCC?
• How much is the civil law transactions tax?
• When does the tax have to be paid?
• The notary pays the tax into the tax office's account
• Exemption for gifts and for exchanges of property

Do relatives have to pay PCC?

Property is quite often sold within a family. In such a situation, it might seem that the transaction would be exempt from tax because of the close ties between the two parties. Unfortunately, the legislator did not provide for such a privilege, so by law, when it comes to a sale, siblings, for example, are treated as strangers to each other.

How much is the civil law transactions tax?

In Poland, sale and purchase agreements are subject to civil law transactions tax (PCC) at a rate of 2%. Importantly, the tax is not calculated on the amount stated in the agreement, but on the market value of the property. Therefore, if the sale price is lower because the parties are related, the tax will still be calculated on the price that would apply in a normal market transaction.

When does the tax have to be paid?

The tax liability arises at the moment the agreement is concluded, not when ownership of the property is transferred. The situation is different when two agreements are concluded: the first concerning the sale and the second the transfer of ownership. In that case the tax is paid when the agreement transferring ownership of the property to the new owner is signed.

The notary pays the tax into the tax office's account

The civil law transactions tax must be paid by the person acquiring the house or flat. The notary handling the transaction should pay it into the account of the relevant tax office on the buyer's behalf.

Exemption for gifts and for exchanges of property

A family can obtain a tax exemption if the property is given as a gift. In this case the Act on Civil Law Transactions Tax does not apply; instead, the Act on Inheritance and Gift Tax applies, which provides for such a privilege for the so-called zero tax group. Relatives could therefore give each other the flat and a sum corresponding to its value, so that they would not have to pay any tax to the State Treasury. For this purpose, two separate gifts are necessary: one of the flat and the other of the money.

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The legislator also provided for an exemption from PCC for persons in tax group I when exchanging properties. This group includes: spouse, descendants (son, daughter, grandchildren, etc.), ascendants (father, mother, grandparents, etc.), siblings, stepchildren, stepfather, stepmother, parents-in-law, son-in-law and daughter-in-law. Among relatives in this group, no tax will be payable when, for example, a son gives his mother a flat and she gives him a house in return.

From a formal point of view, selling a flat between family members is just as complicated as a transaction between two complete strangers. Above, we have briefly presented the issues related to civil law transactions tax (PCC) where the seller and the buyer are relatives. If you still have any doubts in this area, it is best to contact the specialists at REMAX Gold, who will help you avoid legal surprises.