Change in taxation when renting apartments

Change in taxation 8.5% flat rate for 19% linear when renting apartments over PLN 100,000 per year.

The Ministry of Finance introduces new tax regulations when renting apartments and houses – from the beginning of 2019, taxpayers renting these properties would have to pay a flat rate tax of 8.5% only if their revenues from the previous year will not be higher than the statutory limit.

Renting apartments and houses is a good idea for regular income. Many people choose to invest in real estate just for this purpose. Buying a property in a convenient location allows you to earn considerable profits as a result of several dozen years.

Rental tax today

Persons deciding to rent flats and houses should, according to the regulations, report income thus obtained, which are taxable. According to the current legal status, rental income obtained by natural persons outside of business activity is subject to tax at the rates of 18% and 32% according to the scale of the PIT Act. However, changes are planned.

These revenues may also be taxed in accordance with the Act on flat-rate income tax on certain revenues earned by natural persons at a flat rate in accordance with the rate of 8.5%. Taxpayers often opt for such a solution, because it is generally more advantageous to them than PIT, especially for those property owners who do not achieve high costs for rented real estate.

Plans of the Ministry of Finance

The Ministry plans to take the possibility of taxing with a lump sum at a rate of 8.5% of revenue from a so-called private rental, that is, outside the business activity of those taxpayers whose revenues on this account would have been higher in the previous year from the sum of PLN 100,000. Instead, it would only be possible to tax 19% with a flat tax.

The proposal appeared in the draft Act amending the Personal Income Tax Act, the Corporate Income Tax Act and the Act on flat-rate income tax on certain revenues earned by natural persons.

This change would come into force at the beginning of 2019. Therefore, the tax on private lump sum in 2019 would be determined by the number of revenues achieved in 2018.

According to the Ministry of Finance, the introduction of a limit of PLN 100,000 per year, or about PLN 8,333 a month for rental revenues below which a flat-rate tax form will be available, will limit the use of this form of taxation only to taxpayers who treat this type of earnings as an additional source of your income.

At the same time, it is worth pointing out that the new income limit of PLN 100,000 a year is for jointly married spouses.

It is worth noting that according to the data of the Ministry of Finance, the average declared annual rental income in 2015 was PLN 18 240. For now, however, we do not have accurate information on whether this change, which increases the tax burden for many landlords, will come into force.