NSA: Lease for residential purposes with lower property tax
Residential buildings and parts thereof, intended to be leased as part of business activities, if they serve to satisfy the residential needs of the tenants, are not subject to the higher real estate tax rate provided for business activities. What is important is the satisfaction of housing needs, regardless of who fulfils them, stated the Supreme Administrative Court in a Monday resolution (ref. III FPS 2/24), writes the Prawo.pl portal.
– The NSA’s resolution – seemingly paradoxically – should most please those who live in rented houses or flats. If the NSA were to share the view expressed by the prosecutor general in the motion to adopt the resolution, landlords would incur additional costs of investing in residential property for rent, which – with high probability – would be passed on to tenants. On the other hand, municipalities, for which property tax is one of the key budget items, will have to get a taste of it. The NSA’s upholding of the attorney general’s argument would give them grounds to apply a property tax rate that is almost thirty times higher, comments Marcin Bodziony, tax adviser, specialist in tax control and proceedings at Thedy & Partners.
The expert emphasises that this is a substantial difference, especially for so-called metropolitan municipalities. – Elevated (sometimes significantly) inflation, a significant and long-lasting revival in the construction industry and economic growth have made the purchase of flats (often wholesale) for rent in large urban centres a very popular investment model in recent years, notes Marcin Bodziony.
In his opinion, however, all is not lost.
– Although the written justification for the resolution is not yet known, its oral recitals indicate that it is of a ‘Solomon’ nature. For it seems that municipalities will be able to apply an increased real estate tax rate, e.g. to so-called investment vacancies, i.e.
flats or houses that are not rented out and the profit from the investment is to be made as a result of an increase in their value. How do you distinguish whether a flat is an investment vacancy or not? My experience in inspections suggests that the ‘ally’ of the tax authorities here will be the utility bills,’ emphasises Marcin Bodziony.
The entire article can be read on the Prawo.pl portal