Tax authorities are issuing thousands of payment demands for overdue taxes from property sold before the five-year holding period expired.
Tax Obligation for Property Sales
A tax obligation arises from the sale of property or specific property rights if the sale occurs within five years of acquisition or completion of construction. This five-year period is calculated from the end of the calendar year in which the property was acquired or construction finished.
The tax applies to sales made within this five-year timeframe. The taxpayer must file a tax declaration and report the income from the sale. The applicable rate is 19% of the income, which is the difference between the sale revenue and acquisition costs, such as the purchase price or renovation expenses.
Exemption Conditions
No tax is due if the sale occurs after five years. For example, someone who bought an apartment in 2020 will avoid tax only upon selling it from January 1, 2026, onwards.
It is possible to avoid tax even if the sale happens within five years, provided the proceeds are used for the taxpayer’s own housing needs within three years of the transaction. Recognized expenses for housing needs include purchasing or constructing a property, repaying a housing loan, or making permanent improvements.
The scope of the exemption depends on the portion of the proceeds allocated to housing needs. The exempt income is calculated using the formula: (income × housing expenses) / sale revenue. If all proceeds are used for housing, the entire income is tax-exempt. Partial usage results in proportional exemption.
The condition for using this relief is the actual use of funds for the taxpayer’s own housing needs. Regulations do not cover situations where the property purchase does not serve the taxpayer’s own housing requirements.
The “Residence Registration” Tax Break Controversy
A highly controversial tax provision from recent years was the so-called “residence registration” tax break, in force from January 1, 2007, to December 31, 2008. This exemption applied to individuals registered as residing permanently in the sold property for at least 12 months before the sale.
A condition for claiming this break was submitting a declaration confirming the fulfillment of the residence requirement.
The issue affects nearly 19,000 people who sold property during that period and did not submit the required declaration. Consequently, tax offices began issuing payment demands for the overdue tax.
The amounts demanded by the tax authority are very high, often ranging from tens of thousands to several hundred thousand zlotys. For many taxpayers, this results in significant financial consequences despite meeting the basic residence requirement.
Legal Unc Despite Court Ruling
The Constitutional Court ruled that the obligation to submit a declaration regarding residence registration was unconstitutional. The Court noted that tax authorities could independently verify a taxpayer’s registration status without requiring an additional document.
The Court also emphasized that regulations in effect between 2007 and 2008 did not clearly specify the obligation to submit a particular form. Furthermore, the official form was not made available, making it difficult for taxpayers to claim the exemption.
Despite this Constitutional Court ruling, it was not published, meaning it did not formally have legal effect in the system.
The Ombudsman for Citizens’ Rights intervened, stating that taxpayers had no realistic opportunity to claim the residence registration exemption despite meeting the basic condition of being registered in the sold property.
The Ombudsman has called on the Minister of Finance to take a position and resolve the problem affecting thousands of people nationwide, highlighting that the current situation leads to disputes between taxpayers and tax authorities and requires a systemic solution.
In practice, individuals who received payment demands for tax resulting from the non-claiming of the residence registration exemption remain in a state of legal uncertainty.
