Mortgage payment and tax income

Real Estate Attorneys of our Law Firm in Poland would like to inform about the Supreme Administrative Court’s judgment issued on 9 September 2022 (case file II FSK 659/22), in which the Supreme Administrative Court (NSA) held that the part of the real estate sale price paid by the purchaser directly to the mortgage creditor also constitutes income taxable to income tax.

Factual state

In an application for an individual interpretation, a company that is a debtor in rem (owner of real estate) requested clarification as to whether a portion of the sale price of real estate paid by the purchaser directly to the account of a mortgage creditor for the purpose of repaying a mortgage on the real estate constitutes its income subject to income tax.

Mortgage repayment income on the part of the taxpayer

As the authority pointed out, a taxpayer’s income is any value that increases its assets or decreases its liabilities. WSA in Gdańsk shared the authority’s position. It pointed out that, unless the disposal of real estate is done for free, it is a payable disposal within the meaning of Article 14 (1) of the CIT Act. The provision makes it clear that that revenue from a payable disposal is the price specified in the agreement, regardless of the manner of payment. The NSA found this position to be correct, indicating that the debtor in rem (owner of the real estate) obtains income from its payable disposal also in the part of the amount of the mortgage debt transferred directly to the mortgage creditor (bank).

Do you own real estate in Poland and have questions about the settlement of its sale?

If you have questions about the tax settlement of the sale of real estate, please contact our Real Estate Law Office in Warsaw, Poznan, Krakow and Wroclaw.