Investing in real estate can often seem like a daunting task, especially when it comes to purchasing property in a foreign country. The process involves a lot of critical financial decisions, thorough planning, and understanding of certain taxes and fees. This article aims to walk you through what taxes and fees are associated with property purchase in Poland by a foreigner.
Real Estate Acquisition Tax
One of the first taxes you as a foreigner will encounter when buying a property in Poland is the real estate acquisition tax. After buying a property, you must pay this tax within 14 days of receiving a decision from the Tax Office. The tax amounts to 2% of the market value of the purchased real estate.
Value-Added Tax (VAT)
A property construction or renovation within 5 years of its completion is liable to a Value-Added Tax (VAT). For residential properties less than 150m² and for land designated for housing, the VAT is 8%, while for all other properties, it is 23%. However, the sale of buildings, structures, or their parts, and the rights to them, are exempted from VAT if they are sold after more than 5 years of their first occupancy or use.
Annual Property Tax
Once you own a property in Poland, you must pay an annual tax based on the area of the property. For residential buildings, this tax cannot exceed PLN 0.77 per square meter. The rates vary for land and other types of properties.
Notary and Legal Fees
When acquiring property in Poland, several legal and administrative tasks need to be completed. This includes drafting the deed of sale, verifying the identities of involved parties, and registering the property with the Land and Mortgage Register. For these services, a notary fee is charged, typically around 0.5% to 3% of the property’s value. Legal fees for a lawyer to guide you through the whole process can cost you between 1% – 3% of the property’s value.
Real Estate Agent Fee
If you hire a real estate agent for finding, negotiating, and completing the transaction procedure of the property, the fee could be up to 3%+VAT of the property value. Their expertise can prove valuable, particularly when buying property in a foreign country.
Knowing and understanding the various taxes and fees involved in purchasing property in Poland as a foreigner is crucial for your financial planning and making your investment a success. Hence, it is always recommended to consult with real estate professionals with knowledge of the Polish market.
