Housing relief 2019 – who is entitled to it and what can be deducted from tax?

From 1 January 2019 the Ministry of Finance introduced new rules on housing relief. Who is entitled to it and what can we deduct from tax under it? We explain these issues.

• Housing relief 2019 – a longer period of validity
• I inherited and want to sell – how long do I have to avoid paying tax?
• What about renovation expenses on a flat being bought?
• What does the relief cover?

Housing relief 2019 – a longer period of validity

Last November, as part of an amendment to the PIT Act, a number of changes to tax regulations were passed. The most important is the one under which the 2019 version of the housing relief was extended from 2 to 3 years. This is good news for taxpayers. Why? They will have more time to take advantage of the preferential rules. For 3 years after the sale transaction, a property seller will be able to spend the money obtained from it on housing purposes without paying tax. This change will benefit, among others, people buying a property on the primary market. It must be remembered that buying a flat from a developer generally takes a long time, so the longer the relief lasts, the better. Until now, buyers were usually unable to use it because of the two-year "protection period". Now that the relief has been extended, it will be much easier.

I inherited and want to sell – how long do I have to avoid paying tax?

The regulations on the sale of property were also changed by the Ministry of Finance. Until now, the 5-year period after which it could be sold was counted from the moment the heir acquired it. Under the new provisions, 5 years must pass from the acquisition of the flat or house by the testator. This means that whoever receives an inherited flat or house will be able to sell it sooner without incurring the cost of 19% income tax. By law, the sale may take place immediately after acquiring a property received by inheritance. A necessary condition is that the funds obtained in this way are spent on so-called own housing purposes. Interestingly, the money can be spent on a property located not only in Poland, but also in the European Union, Switzerland and the European Economic Area.

What about renovation expenses on a flat being bought?

Tax changes have also been introduced for those who renovate a rented flat in order to buy it out shortly afterwards. In November the head of the finance ministry announced that this was a nod to those taxpayers who invest in a property before they buy it out as their own. Anyone who spent money obtained from the sale of another property on renovation will also be covered by the relief. This will be possible if no more than 3 years pass from the disposal of the previous property to the acquisition of the new one.

What does the relief cover?

So far, this text has discussed the kinds of property covered by the relief, such as houses and flats. They were the subject of the provisions whose key concept is own housing purposes, but these provisions have a much broader scope. They relate, it is worth stressing, to:

• buying a flat,
• renovating a flat being bought,
• repaying a loan taken out to buy a property for housing purposes,
• buying a house,
• buying a plot of land,
• acquiring a right of perpetual usufruct (użytkowanie wieczyste),
• buying a building under construction,
• acquiring a cooperative ownership right (spółdzielcze własnościowe prawo do lokalu) to a residential unit.

The relief available to the buyer therefore applies when the funds obtained from the sale of a previously owned property are spent on the purposes listed above.

READ ALSO – A RENOVATION COST ESTIMATE FOR THE BANK – HOW TO PREPARE IT?

As you can see, the new tax rules are much more attractive to the taxpayer than the earlier ones. Among other things, as government officials stress, they stand out for their transparency and simplicity. However, in case of any doubts you can turn for help to the specialists at REMAX Gold, who are always ready to advise.