Taxes

* Approximate costs of the finishing work of a brand-new apartment:

After a new Polish development is handed over by the developer, the new owners - are usually responsible for all finishing work. We have specialized teams who take care of all this from beginning to end.
The final cost of the finishing work depends on the size of the given property. In most cases our clients purchase 50-70 Sq. m. apartments and then the average final cost of the finishing work and the interior design amounts to around 400 € per m2 which usually includes: fees of sub-contractors, labour costs, décor, home appliances, furniture and all remaining elements necessary for the successful and long-term renting of the new property.

* Tax on rental incomes:

On November the 13th 1995 governments of both The Republic of Poland and Ireland signed in Madrid, the Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. According to article 6 of the given Agreement, the income derived by a resident of a Contracting State (an Irish citizen) from immovable property (including income from agriculture or forestry) situated in the other Contracting State (Poland) may be taxed in that other State (Poland).
As a result of this regulation and also in connection with article 3.2a of the Polish Personal Income Tax (PIT) - a citizen of Ireland being an owner of a real estate located in Poland is subject to tax liability under the Polish tax law which does include the tax on rental incomes.
The rate of the income tax amounts to 8,5% of the rental incomes and is paid monthly. No costs are allowed against this income. However, if income is classed as personal income and not rental income then the tax is 19% and costs are allowable including mortgage interest if the property has been financed locally.
The Irish investor has to register for the tax purposes at the appropriate polish Tax Office and get the Polish Tax Identification Number (NIP).
Polish tax payable by an Irish citizen under the laws of Poland and in accordance with the Agreement for the avoidance of double taxation, whether directly or by deduction, on profits, income or gains from sources within Poland shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Polish tax is computed (article 24 of the Agreement).
Warsaw Properties co-operates with the registered accountants and can supervise annual tax returns on rental incomes earned in Poland.

* Other related Taxes & fees:

All real estate located in Poland is subject to real estate tax within the limits defined in the Local Taxes Act published every year. As specified, annual tax rates are determined by resolutions of the local self-government council and may be different in each administrative area. The 2005 maximum real estate tax rates for selected types of real property are set out in the following table:
Type of Real Estate Annual Tax Rate per Square Meter
 

Perpetual usufruct is a cost associated with sites where there is no freehold title. An owner of a dwelling which is located in a building situated within a plot of land used under perpetual usufruct is obliged to pay fees arising out of the said perpetual usufruct. The perpetual usufruct is given for 99 years and after this term it is extended for another 99 years. The majority of sites in Warsaw have the status of perpetual usufruct. The amount of the above-mentioned fee is calculated in accordance with the provision of the Real Estate Management Act (e.g. for an apartment of 50-70 Sq. m. with one garage space the total fee would be around 80 € per annum).

* Capital Gains Taxes

The current CGT in Poland is 19%. This tax was introduced on January 1st 2007 to replace the old system of transaction tax. According to the old system, if an investor makes a decision to sell real estate located in Poland within 5 years from the end of the calendar year of its acquisition, then such a transaction is subject to property transaction tax. This transaction tax amounts to 10% of the value of the selling price which can be verified and checked by the Polish Tax Office.

* Other possible related costs:

One can expect to pay on average 1 months rent as a fee to letting agencies. The average time from the property going on the market to a tenant actually moving in is about 1 month at the upper end of the market.
All buildings have a management company or residents association which administers and controls the servicing of the property. The cost of this can be calculated at about 2 euro per m2 per month..
Generally included in the management fee:

       • Hot & Cold water
       • Heating
       • Refuse collection
       • Security
       • Lifts
       • Renovation fund
       • Garage / Parking
       • Cleaning
       • Insurance