The first tax on renting an apartment? You need to be careful about that!

Are you planning to rent an apartment? In that case, you cannot avoid the obligation to pay tax on rental income. What is the rate of this tax? Who is obligated to pay it, and where should the payment be made? We answer these questions and many more in our latest article. We invite you to read on!

Tax on Apartment Rentals – Basic Information

The tax on apartment rentals is a mandatory obligation imposed on income generated from renting real estate in Poland, regulated by the provisions of the Personal Income Tax Act. It raises certain doubts, mainly due to differing calculation rules for individuals and entrepreneurs. However, in practice, settling with the Tax Office is not complicated—especially for individuals. It is worth noting that with the introduction of the Polish Deal, the rules of taxation have changed.

Previously, individuals could choose the method of taxation on rental income. As of January 2023, this option has been abolished—the general taxation rules are no longer in effect, nor is there a tax-free allowance or the ability to deduct costs related to renting. Now, landlords must settle under the system of recorded lump sum taxation, which has two tax thresholds—8.5% and 12.5%.

The situation is different for entrepreneurs, who are also required to pay tax on apartment rentals. For them, the changes are minimal—they can still settle under the general rules or choose a flat tax. So, if you run a business, you have the option to choose one of these two options.

What is the Tax on Apartment Rentals in 2024?

For individuals renting apartments, when settling the lump sum tax, there are two thresholds:

• 8.5% of revenue if it does not exceed 100,000 PLN per year;
• 12.5% of revenue if it exceeds 100,000 PLN per year.

It is important to remember that advance payments for rental tax must be made monthly or quarterly, provided certain conditions are met. The most commonly chosen option is monthly settlement—if you earn income in May, you must pay tax on it by June 20.

On the other hand, entrepreneurs can choose one of two forms of taxation:

• General rules, with two thresholds:
  • 12% for revenues up to 120,000 PLN;
  • 32% for revenues above 120,000 PLN.
• Linear tax at 19%.

The choice of the appropriate option depends on the rental income level. If it is high (e.g., over 120,000 PLN), linear taxation may be more advantageous, allowing one to avoid the higher 32% threshold. However, if the income is lower, general rules may be better due to the possibility of benefiting from the tax-free amount and deducting expenses related to renting, such as renovations or the purchase of equipment.

Who must pay tax on rental activities?

Every person renting an apartment, whether an individual or a business entity, is required to pay rental tax. Neglecting this obligation can lead to serious financial consequences. Failure to pay tax can result not only in interest, which depends on the amount of the arrears, but also in fines. Committing a tax offense may lead to a penalty of twice the minimum wage.

Even harsher penalties await taxpayers who commit tax crimes, which occur when the arrears exceed five times the minimum wage. In such cases, the penalty is imposed by a court and can be very severe. To avoid these harsh penalties, one must always pay rental taxes on time.

When should the rental tax for 2024 be paid?

The timing of the payment depends on whether you choose monthly or quarterly settlement. In the case of monthly settlement, according to Article 21, paragraphs 1 and 1a of the flat-rate income tax act, individuals are required to calculate the flat-rate tax on recorded income for each month and pay it to the Tax Office by the 20th day of the month following that month. For example, the settlement for December must be done by January 20 of the following tax year.

Regarding tax payment, many people wonder which tax form to use for rental income. This question should be asked by those opting for quarterly settlement. In that case, the rental tax must be paid by the 20th day of the month following the end of the quarter to which the flat rate applies. It is worth remembering that if you choose quarterly settlement, you must report this in the annual tax return (PIT-28).

Occasional rental vs. rental tax

Renting an apartment under occasional rental terms significantly differs from standard private rental. Occasional rental offers greater protection to the property owner but requires a notarial deed and registration with the Tax Office within 14 days.

Standard private rental does not require registration with the Tax Office or submission of the contract for inspection. The only requirement for the taxpayer is to regularly pay monthly advances on income tax, regardless of whether they are calculated flat-rate or according to general rules.

How to maximize the benefits of renting?

Since you now know what rental tax is, it’s also worth paying attention to which properties are most often rented when planning to start earning. Tenants are most likely to rent apartments that are well-located, especially near city centers, universities, or in well-connected districts. An important factor is also the standard of finishing, with modern and functional furnishings that ensure comfort in daily life. The presence of amenities such as parking, balconies, or access to infrastructure like shops, restaurants, and educational institutions is also significant. A price that is adequate to the quality and location offered also plays a crucial role in tenants’ decisions.

The above-mentioned features characterize the new apartments in Wrocław available from Ronson Development. The modern housing estates presented in our portfolio offer units in excellent locations with easy access to green areas. Our apartments are ideal places for comfortable living in a dynamically developing city.