Completed investments must be reported to the tax authorities. Check whether this obligation applies to you too
Entrepreneurs who, in 2023, completed the construction of a property or commenced the use of a building or structure, will have to settle the real estate tax by the end of January 2024. However, before filing the return and paying the tax, it is worth checking whether such obligations will actually be imposed on us.
The obligation to pay property tax arises from 1 January of the year following the year in which the construction was completed or in which use of the structure or building or parts thereof was commenced before its final completion. These are rules derived from the regulations.
– These rules are very important especially when entrepreneurs complete a given investment at the turn of the year. If construction investments were completed in December, it may turn out that they were finally finished in January, for example. Then, the tax obligation will de facto be postponed by a year and will arise as late as on 1 January 2025. Charging and paying tax too early means unnecessary costs for the company, suggests Paweł Wyporski, an expert on accounting for investments in real estate tax.
What else is worth paying attention to? According to Paweł Wyporski, it is also necessary to check whether the entrepreneur will be a property tax payer. This is because sometimes there may be a specific legal situation of the real estate, which may result in the fact that it is not the investor who will be obliged to settle the real estate tax. A final important element of control on the part of investors should also be the proper classification of objects for property tax purposes. Among other things, it will be crucial to determine whether one is dealing with a building or a structure. Tax on buildings will be calculated on the usable area, while in the case of structures, only the value of the objects will be relevant for taxation.
– In practice, it also often happens that taxpayers make a mistake with such a classification and wrongly measure the usable area of the property, which results in significant tax overpayments, adds Paweł Wyporski.
Not sure if your investment should be settled for property tax as early as January 2024? Or maybe you do not know how to properly classify or measure your facilities? Feel free to contact Paweł Wyporski, an expert in property tax settlement of investments at Thedy & Partners.