EXCLUSIVE: Real estate investment completed? Check your tax obligations

Taxpayers who have completed real estate investments or put them into use in 2023 will have to account for them in terms of real estate tax as early as January. How are the terms ‘complete investments’ or ‘put them into use’ to be understood?

Article 6(2) of the Local Taxes and Fees Act makes the tax liability dependent on the earlier occurrence of one of two events: the completion of construction or the commencement of use (of the structures or parts thereof), which occurs before the construction is completed. The tax legislation does not indicate how the term ‘completion of construction’ is to be understood – nor does it refer to other legislation in this regard. In practice, according to well-established case law, the date on which the last entry in the construction log is made is deemed to be the time when construction is completed. On the other hand, the actual use of a newly erected building or structure is deemed to commence – thus, a situation may arise in which a taxpayer will be obliged to pay real estate tax on a building, which – in the meaning of the construction law – has not yet been put into use. It should also be emphasised that, often forgotten by taxpayers, the fact that a later actual obtaining of an occupancy permit or the commencement of the use of a building is irrelevant for the date on which the tax obligation arises, if the condition of the completion of the construction has been fulfilled earlier.

If the taxpayer has already established that he has fulfilled the conditions for completion or commissioning, what obligations will he have in the area of real estate tax?

First of all, in a situation where the taxpayer has completed the construction or commenced the use of a building or structure at the turn of the year, it will be necessary to establish the exact date on which the indicated event took place. The difference of a few days or even one day may determine whether the taxpayer should show the given facility for taxation already in the real estate tax return filed in January 2024, or whether he will be able to postpone the moment when the tax obligation arises until 2025. However, if our construction was completed in 2023, or if we started using it in that year before the construction was completed – the taxpayer will be obliged for real estate tax purposes to determine which objects from the completed investment will be taxable at all, and in what way, i.e. whether we are dealing with a building or a structure. Once the subject of taxation has been correctly defined, the taxpayer should determine the usable area of the new buildings and the value of the newly created structures, on which he will then calculate the real estate tax.

The entire interview can be read at this link: Inwestycja nieruchomościowa zakończona? Sprawdź swoje obowiązki podatkowe [WYWIAD] – Forum Polskiej Gospodarki (fpg24.pl)