Amendments to the inherited property sales tax

Inherited property sales tax

On January 1^st, 2019 new, amended provisions on Polish act on personal income tax will enter into force, positively changing taxation of people intending to sell the real estate acquired through inheritance.  Till now, the successors were obliged to pay 19% of income tax in case of sale the real estate prior to lapse of 5 years period counted from the end of the calendar year in which the decedent died. As a result, the period was counted from the date of acquisition of the property by the successors.

What will change?

New provisions assume that the 5 years period will be counted from the date of purchase/construction of the real estate by the decedent, and not by the successor – as it is currently. Therefore, it may happen that at the time of inheritance, the succesor will be already exempted from 19% property sales tax. In circumstances when the decedent had a property for less then 5 years prior to death, such period will be added to the time of the successor possession. New regulation undoubtedly improves the situation of successors, as the 5 years period does not run again upon death, significantly shortening the waiting period entiteling to be exempted from the property sale tax.

Who will benefit from new provisions?

The new, amended provisions will be applicable to successors who inherited properties after and before the entry into force of the Act. With respect to the latter, the preferential way of counting the 5 years period will be applicable in the situations when the sale of the property takes place after January 1st, 2019.