The Polish Ministry of Finance plans to implement strict limitations on housing tax relief to stop “serial” property flipping, with new regulations set to take effect on January 1, 2027.
Ending the “Eldorado” for Property Flippers
The Ministry of Finance intends to modify the rules of the popular housing tax relief, which currently allows individuals selling a property within five years of purchase to avoid tax if the funds are used for their own housing purposes or to buy another property.
While current laws were designed for people changing residences for personal life reasons, the ministry has observed a worrying trend of investors and flippers repeatedly using the PIT exemption for commercial gain.
Closing System Loopholes
Officials argue that the existing mechanism has become too porous. Instead of protecting the interests of average citizens, it has begun to serve as a tool for avoiding taxation during serial commercial transactions.
The New “Quarantine” and 19% Tax
The government’s new proposal introduces a time restriction: a taxpayer will be ineligible for the relief if they have used it within the three years preceding the sale of another property.
This measure is designed to block the mechanism that allows for tax avoidance during repeated transactions in the housing market, potentially forcing many to pay the full 19% tax on profits.
Impact on Investors and the Secondary Market
The introduction of a “quarantine” on the relief may significantly impact the profitability of short-term investments. Investors will either have to hold properties for five years to avoid tax under general rules or accept the 19% profit tax.
Experts suggest that while the change will be nearly imperceptible for the average homeowner, it may lead to a slight cooling of prices in the secondary market segment, which has previously fueled rapid transactions.
