The draft amendment to tax acts published on July 26, 2021 (including the act on flat-rate income tax on certain revenues earned by natural persons and the PIT Act), which is part of the Polish Deal program, announces, among other things a significant change in the principles of taxation of revenues from rental and lease achieved outside of economic activity (so-called private rental).
From 2022, the only acceptable form of taxation of these revenues from rental is to be a lump sum on recorded revenues without the right to apply the tax scale and depreciation of residential premises. Lump sum rates for revenues from this title will not change. They will continue to amount to 8,5% of revenue up to the amount of 100 000 PLN and 12,5% of the surplus over 100 000 PLN.
Rental - state for 2021
Private rental (as a natural person) can be settled according to the tax scale (17% and 32% of income), i.e. the so-called general rules and a lump sum (8,5% of the income up to the amount of 100 000 PLN and 12,5% of the surplus over 100 000 PLN. The advantage of the lump sum is simple settlements, the disadvantage - the inability to deduct costs and use the tax-free amount.
Business’s rental
Persons running sole proprietorships in the field of apartment rental may tax the income obtained in this way according to the tax scale (17% - income not exceeding the first tax threshold, 32% - the second tax threshold relating to income above 85 528 PLN) or with a flat tax (19% regardless of the the amount of income obtained). From 2021, it is possible to tax with a flat rate (i.e. a rate of 8,5% and 12,5% over 100 000 PLN) of rental income as part of business activities.
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It is assumed that the lump sum is the most advantageous way of rental taxation. Especially when the revenues do not exceed 100 000 PLN and at law cost.
On the other hand, the general principles are profitable in the case of incurring significant costs lowering the tax base (renovation, rent, loan servicing or amortization of real estate acquisition costs).
The flat tax becomes attractive when the income exceeds the second tax threshold of 85 528 PLN (in relation to taxation according to the tax scale).
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PwC Comment
Limiting the choice of the form of private rental taxation and obligatory taxation of these revenues with a lump sum will be important for people earning money on renting real estate. It may turn out to be disadvantageous for landlords who bear high costs related to the subject of the rental.
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