Purchase of a first flat without tax on civil-law transactions
On 31 August 2023, amendments to the Act on tax on civil-law transactions (hereinafter: the PCC Act) came into force, introducing an exemption from the obligation to pay tax on civil-law transactions (hereinafter: PCC) when purchasing a first flat on the secondary market. The solution may allow those buying their first flat savings of several to even over a dozen thousand zlotys.
The rate of PCC on sale of real estate is 2%, and the obligation to pay the tax is on the buyer of the real estate. For example, a person purchasing a flat on the secondary market worth PLN 250 000 was until now (regardless of the number of properties owned) obliged to pay PCC on the purchase in the amount of PLN 5 000. As a result of the introduction of the new provisions, provided that the conditions referred to in the PCC Act are met, a person who acquires the first flat on the secondary market will save PLN 5 000 in the case at issue.
In order to apply the above-mentioned exemption, the buyer must be a natural person or natural persons that on the day of selling and the day before, do not have:
- ownership title to an apartment constituting a separate property;
- ownership title to a detached house;
- a cooperative ownership right to an apartment or detached house.
Therefore, as a rule, the exemption will apply if the taxpayer, prior to the acquisition of the real estate, was not entitled to any of the aforementioned rights or to a share in them.
One exception is where a natural person holds or has held a share in the above-mentioned titles which does not or has not exceeded 50% and was acquired by way inheritance.
In the context of PCC exemptions, it is worth noting another crucial amendment introduced in the same bill.
From 1 January 2024, a 6% PCC rate will start to apply where the buyer acquires at least six or more residential units constituting separate properties in one or more buildings built on one piece of land taxable with value added tax, or shares in those units.
The 6% tax rate will apply to a contract of sale concluded with the same buyer concerning the 6th and any consecutive apartment in the same building.
It should be mentioned that in the case of purchase of real properties situated on separate plots or not subject to VAT, the regulation will not apply. In practice, more often than not investors purchase a number of flats located in different locations.
In summary, we view the changes as positive. Exemption from the mandatory payment of tax in case of purchasing the first real property will constitute a substantial saving for buyers. Moreover, the introduction of a 6% PCC rate may limit the wholesale buy-out of flats, which drives up the prices on the real estate market.
Klaudyna Malinowska, Tax Consultant, ATA Tax Sp. z o.o.
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