Exemption from PCC Tax on the Purchase of the First Apartment

On August 31, 2023, changes to the Civil Law Transactions Tax Act (PCC Act) came into effect, introducing an exemption from the obligation to pay the PCC tax when acquiring the first apartment from the secondary market. This new solution can result in savings of several thousand to even tens of thousands of PLN for those purchasing their first property.

The PCC tax rate on the sale of real estate is 2%, and the tax liability rests with the buyer. For instance, a person purchasing an apartment from the secondary market valued at PLN 250,000 was previously (regardless of how many properties they owned) required to pay PCC tax, amounting to PLN 5,000. Thanks to the new regulations, under the conditions specified in the PCC Act, a person purchasing their first apartment from the secondary market will save PLN 5,000 in the described scenario.

Conditions for the Exemption

To apply the exemption, the buyer must be an individual or individuals who, on the date of sale and prior to that date, did not have:

• Ownership rights to a residential unit that constitutes a separate property,

• Ownership rights to a single-family residential building,

• Cooperative ownership rights to a residential unit or a single-family house.

Thus, the exemption will generally apply if the taxpayer did not hold any of the aforementioned rights or shares in these rights before acquiring the property.

Exception

An exception to this rule exists when the individual has or had a share in the above-mentioned rights that does not exceed 50% and was acquired through inheritance.

Additional Changes: 6% PCC Tax Rate

Additionally, another important change introduced by the same legal act is the introduction of a 6% PCC tax rate, effective from January 1, 2024. This tax rate will apply when the buyer acquires at least six residential units, each constituting a separate property in one or more buildings on the same plot of land, subject to VAT, or shares in these units.

The 6% tax rate will apply to the sale of the sixth and every subsequent unit in the same building with the same buyer. However, this regulation will not apply to the purchase of properties located on separate plots of land or those not subject to VAT. In practice, this provision will more often affect investors who purchase multiple apartments in different locations.

Conclusion

In conclusion, the changes introduced are seen as positive. The exemption from paying the PCC tax when acquiring the first property will represent significant savings for buyers. On the other hand, the introduction of the 6% PCC tax rate will likely curb bulk property purchases, which often inflate real estate prices.