Tax hacks when selling real estate in Poland

“Everyday Scenario”: You purchase an apartment in Poland (either as a Polish tax resident or becoming one during your ownership). After some time, You decide to sell this apartment because You desire, for instance, to spend Your days dreaming by the turquoise waves of the Mediterranean Sea in Spain… The proceeds from the sale of the apartment become Your income, subject to capital gains tax. But, naturally, You don’t want to lose your hard-earned money to capital gains tax on this sale.

So, how can You legally retain your profit from the sale of real estate without tax losses?
Simple! Says a practicing lawyer in Poland.

Follow just two criteria:
1. Invest the money from the sale of real estate in Poland into purchasing real estate in another EU country, a country within the European Economic Area, or the Swiss Confederation (of course, purchasing new housing can also take place in Poland);
2. Use the new acquisition to meet Your own housing needs.

Now, in more detail.
Official interpretations of Polish tax law are clear on this issue: when disposing of private real estate after five years of ownership, the owner is automatically exempt from capital gains tax. An apartment/house purchased in 2023 can be sold tax-free in 2029. This is the first legal hack from a lawyer.

The second hack is how to bypass the first if you have owned the property for less than five years…
Your official income from the sale will be automatically exempt from capital gains tax before the end of five full years of ownership under the PIT Act if (!) the entire amount received from the sale is directed towards further meeting Your personal housing needs. Simply put, sell one apartment/house in which You live and buy another apartment/house in which you will continue to live. If you wish to invest the money received from the sale in other real estate for the purpose of renting it out, renovating it for resale, or for meeting the housing needs of others, such as children or other family members, there will be no capital gains tax exemption (!). Sell your property, buy a new one, and live in it personally. Naturally, family members can move in with You.

Important (!) There is no limit to the number of properties where You can meet your “housing needs.” You can have a summer home in Poland, a winter home in Italy, and another one as a retirement asset. This means that even the owner of four apartments can benefit from the income tax exemption. The key is that the person wishing to take advantage of the housing relief provides sufficient convincing arguments that they are indeed fulfilling their personal housing needs in each property.

Legal Basis:
1. Tax Interpretations:
1.1. Interpretation from 10.05.2024 No. 0115-KDIT3.4011.369.2024.1.RS;
1.2. Interpretation from 31.01.2022 No. 0113-KDIPT2-1.2011.1077.2021.2.ACZ.
2. The Act of August 29, 1997 – Tax Ordinance (Journal of Laws of 2022, item 2651).