Purchasing real estate may be a key step for entrepreneurs who are thinking about developing their business. In order to make a decision about purchasing a property, it is worth knowing what taxes are related to it and whether real estate tax is a tax-deductible expense. This can have a significant impact on the return on investment. What are the main tax aspects you should pay attention to when buying real estate and what does it look like for different types of premises?
What tax must an individual and an entrepreneur pay on the purchase of real estate?
The main taxes that may be related to the purchase of real estate are tax on civil law transactions (PCC) and value added tax (VAT). Differences in taxation result from the purpose of the property and the status of the buyer.
- Tax on civil law transactions (PCC) - a tax paid at the time of concluding a purchase and sale agreement. In Poland, PCC rates are determined depending on the value of the property and its purpose. Both natural persons and entrepreneurs may be subject to such taxation. In the case of private individuals, the PCC rate is 2% of the value of the property, while entrepreneurs can benefit from preferential rates, the amount of which depends on the purpose of the property and on meeting certain conditions.
- VAT - is mainly related to transactions made on the primary market. If you purchase a new property from a developer, the price already includes VAT. Its standard rate is 23%, but it can be lower and amount to 8%. It depends on the area and the subsequent use of the property.
How much tax on the purchase of real estate will you pay depending on the type of premises?
How much real estate tax should be paid after purchasing it depends not only on the area, but also on the type of premises. Real estate intended for residential purposes is subject to a different VAT rate than real estate intended for business purposes.
- Commercial premises - When purchasing real estate intended for commercial purposes, the standard VAT rate is 23%. It is calculated from the total price of the premises. In the case of entrepreneurs who plan to use real estate to run a business, it is possible to deduct VAT, which over time allows you to recover the money allocated for it.
- Residential premises - In the case of transactions related to the purchase of residential premises, the VAT rate is lower and amounts to 8%. However, it is not always more beneficial. When purchasing real estate for residential purposes, tax cannot be deducted in any way.
Purchasing real estate and the costs of obtaining income
Is real estate tax a tax deductible expense? Absolutely, it can be considered as such. In the case of entrepreneurs who rent real estate or use it in their business activities, it is also possible to deduct other costs related to the purchase. Costs incurred for renovations, maintenance or loan interest may be included as tax-deductible costs. Thanks to this, entrepreneurs are able to reduce their tax burden and increase the profitability of their investments.
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What else should you know?
Before you decide to buy real estate, consider consulting an expert. It will help you understand all the legal and tax aspects involved. It is also worth remembering about possible tax reliefs that may be available to entrepreneurs investing in the development of their business.
Purchasing real estate can be a profitable investment, but the taxes associated with it have a significant impact on the total costs incurred. Therefore, it is important to understand exactly how they are calculated. Awareness of the possibility of deducting costs can also help entrepreneurs optimize taxes and increase the efficiency of investments.
If you are planning to buy a property, be sure to check: Tender announcements for the sale of real estate - where to look for them?