Loan repayment as a residential purpose expense

Housing benefit – rules

The possibility to take advantage of the benefit is regulated in Article 21 Section 1 point 131 of the PIT Act. In accordance with this provision, in the case of investing money obtained from the sale of real estate for one’s own residential purposes (e.g. for purchasing a house, flat, land, construction or renovation). The period within which the investment must be made is three years, counting from the end of the year in which the sale took place. For example, if a taxpayer sold a property in 2019, he has time until the end of 2022 to make the investment. He must also inform the Tax Office of his intention to take advantage of the benefit in his PIT-39 declaration (for the year in which the sale took place). In order not to pay any income tax at all, the entire amount obtained must be spent on residential purposes specified in the act (Article 21 Section 25 of the PIT Act).

Loan repayment as a residential purpose expense

Real Estate Attorneys of our Law Firm in Poland informs that a recently issued general interpretation by the Minister of Finance informed that the benefit also covers expenses for repayment of a loan incurred for purchase of sold real estate. As the Minister of Finance pointed out, for income tax purposes, expenses for repayment of a credit or loan and interest incurred to finance expenses related to the real estate being sold should be deemed to fall within the scope of Article 21 Section 25 of the PIT Act.

Importantly, the interpretation indicates that this position also applies to the legal status prior to 31 December 2021 (earlier a different interpretation of the provisions in question was in force). Taxpayers who have sold a flat before the expiry of five years from acquisition are therefore entitled to submit a correction.

Do you own a flat in Poland and plan to sell it before the expiry of five years from acquisition?

If you have questions regarding your eligibility for housing benefit, please contact our Real Estate Law Firm in Warsaw, Poznan, Krakow and Wroclaw.