Possibility to benefit from the full housing allowance

In the judgment of 4 November 2021 in the case ref. no. II FSK 360/19, the Supreme Administrative Court (NSA) addressed the issue of the right to the so-called housing allowance in a situation where expenses are incurred for the purchase of a residential building connected with an outbuilding.

The ruling was issued on the basis of the following factual state. The taxpayer transferred funds from the sale of a real estate to purchase another real estate in Poland with a residential and commercial building – before the lapse of five years from the purchase of the sold real estate. The taxpayer wanted to take advantage of the so-called housing relief (exemption from income tax on expenditures for his own housing purposes). However, according to the authorities, such exemption can only apply to the purchase of the residential building, without taking into account the funds spent on the associated outbuilding.

In his appeal to the WSA in Rzeszów, the taxpayer pointed out that the real estate he had purchased constituted a single economic unit which he used for residential purposes. The buildings located on them are inseparably connected with residential buildings. The WSA agreed with the appellant and added that the outbuilding on the plot of land is not legally separate, therefore the exemption should apply to the entire real estate. This position was confirmed by the NSA, which indicated that in this situation, all buildings (including outbuildings) will serve residential purposes because this is the nature of the land. Therefore, an outbuilding may also have a residential function, which is connected with the possibility of obtaining the tax relief, if it is located on the same plot of land and connected with a residential building.