Poland cuts tax for first-time homebuyers and raises it for those buying multiple properties

Poland has exempted first-time homebuyers from paying a 2% transaction tax when purchasing a property on the secondary market. It will also soon introduce a new 6% transaction tax on those who buy six or more properties in the same development.

The changes are part of the government’s efforts to help young people buy their first home and to discourage individuals from purchasing multiple properties for profit, as Poland grapples with a housing shortage.

There were 1.8 million uninhabited dwellings (almost 12% of the total number) in Poland last year, despite the country facing a housing shortage, the national census found.

In Warsaw alone, 207,000 dwellings (a fifth of all homes) were standing empty https://t.co/GIavVL2akg

— Notes from Poland 🇵🇱 (@notesfrompoland) October 21, 2022

The tax relief, which went into force at the end of August, applies to all first-time buyers on the secondary market – meaning properties that are being resold, rather than newly built ones – and not only those who take advantage of a preferential loan scheme for first-time buyers launched two months earlier.

According to the development ministry, when buying a property worth 500,000 zloty (€111,940), a first-time buyer will be able to save 10,000 zloty (€2,239) thanks to the tax relief. For a property worth 700,000 zloty, the saving would be 14,000 zloty.

“From now on, you can save a considerable amount of money when buying your first apartment or house, which will certainly come in handy when renovating, for example,” said development minister Waldemar Buda.

The relief applies only to the purchase of a property on the secondary market as the tax on civil law transactions is not levied on the primary market (i.e. for newly built properties). When buying a home on the primary market, however, VAT ranging from 8% to 23% is levied.

Poles purchased almost 3,000 residential properties in Spain last year, a record figure and annual rise of 160%.

We visited the Costa Blanca to look at what is behind this trend and how the growing Polish presence is being felt https://t.co/FBoqmvyHe8

— Notes from Poland 🇵🇱 (@notesfrompoland) June 6, 2023

Meanwhile, from 1 January 2024, a 6% transaction tax will be imposed on those buying a sixth or subsequent property that is within the same building or in more than one building on the same plot.

The development ministry says that this increase aims to counteract situations in which those making bulk purchases of properties compete with ordinary purchasers and can obtain a lower price from the developer thanks to purchasing a higher number of units at one time.

“Those who buy large numbers of homes for profit will face the fact that their profit will be depleted from 1 January 2024,” said Buda.

📅Od 1 stycznia 2024 r. zacznie obowiązywać 6% podatek #PCC od zakupu szóstego i kolejnych mieszkań w tej samej lokalizacji.

Wprowadzenie podatku od hurtowych zakupów oznacza większą dostępność mieszkań dla obywateli. pic.twitter.com/eXeHTtkEkz

— Ministerstwo Rozwoju i Technologii (@MRiTGOVPL) August 31, 2023

In a runup to next month’s parliamentary election, parties across the political spectrum have been offering policy proposals to counteract Poland’s housing shortage, which is most acute for young, first-time buyers.

Almost half of Poles aged 25-34 live with their parents, up from a third two decades ago and one of the highest levels in the European Union.

The largest opposition party, Civic Platform (PO), has sought to outbid the ruling Law and Justice (PiS) party by proposing a scheme whereby the state would subsidise mortgages for first-time buyers.

However, such policies have been criticised by The Left (Lewica), the second-largest opposition group, which argues that increasing demand without boosting supply will simply further raise prices. It has instead proposed to build 300,000 new social housing units over the next four-year parliamentary term.

Prices for both buying and renting in Poland have soared, leaving many struggling to afford housing.

But solutions proposed by the two main parties – to subsidies mortgages – repeat demand-side solutions that have failed in the past, writes @WojciechKosc https://t.co/I0DUlOEn2h

— Notes from Poland 🇵🇱 (@notesfrompoland) March 31, 2023

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: Pixabay / Pexels