Poland Real Estate Investment Guide for Foreigners

Table of Contents

• Legal Requirements for Real Estate Investment in Poland
• Real Estate Investment and Taxes/Fees in Poland
• Purchase Taxes/Fees
• Ownership Taxes/Fees
• Sales Taxes/Fees
• How to Invest in Real Estate in Poland: Practical Tips and Tricks
• What to Invest in?
• Where to Invest?
• How to Invest?
• The Takeaway

Real estate in Poland is an excellent investment – apartment and house prices have grown rapidly, especially since the introduction of governmental programs that encourage people to buy properties. Foreigners can easily invest in real estate here, but they need to be aware of all the legal regulations and requirements. For instance, do you know that you might need to pay VAT for new buildings? Or the transfer tax (2%) for secondary housing? Learn more about the ins and outs of the Polish real estate market here!

Legal Requirements for Real Estate Investment in Poland

Let’s start with the basics. Are there any legal requirements to purchase real estate in Poland? It depends.

If you’re from the European Economic Area and the Swiss Confederation, as well as Norway, Iceland, and Liechtenstein, you do not need a special permit. The requirement to obtain a permit also does not apply to the purchase of an independent dwelling to meet the purchaser’s housing needs. The same applies to those who obtained a permanent residence permit at least 5 years ago (or at least 2 years ago if this happened through marriage with a Polish citizen). Finally, you don’t need a permit if you are a mortgage creditor in the situation of taking over the property after an unsuccessful auction in foreclosure proceedings and to legal heirs when the property is to be acquired by inheritance.

In other cases, you will need a permit from the minister of MSWiA (Ministry of Internal Affairs and Administration).

Real Estate Investment and Taxes/Fees in Poland

When it comes to taxes, things get a bit more complicated (as always with taxes!). Here, you will have to pay several types of taxes, depending on what property you buy/sell/have.

Purchase Taxes/Fees

Let’s start with the taxes that you need to pay when purchasing a property in Poland. Here, you might be required to pay:

• Value added tax (VAT) – in cases where you’re buying a completely new building as it’s treated like a product.
• Transfer tax (PCC) – paid when you get secondary housing and, in some cases, for primary housing as well. You don’t have to pay it if you purchase your first property. It’s based on the value of the property, not the price you paid for it. PCC might constitute a higher % of the value if you purchase a higher number of properties.

Additionally, you might need to pay some extra fees, including:

• Notary fee – required for acquiring proper, legally-binding contracts.
• Agency fee – if you work with a real estate agency – it’s usually somewhere between 2-4% of the transaction.

Ownership Taxes/Fees

If you own a property in Poland, you also need to pay off recurring fees. These include:

• housing cooperative rent,
• real estate tax – it is based on the location and the size of your property (including both the apartment and the land you co-own).

Sales Taxes/Fees

Although most costs lie on the buyer when investing in real estate in Poland, there is one additional tax that you might need to pay when selling your property: the capital gains tax. How does it work?

This taxation applies to your property only if you decide to sell it less than 5 years after purchasing it. In such cases, you need to pay 19% of the difference between the sale and purchase prices.

How to Invest in Real Estate in Poland: Practical Tips and Tricks

We’ve gone through the legal aspects, so now let’s focus on the core: what and where. So, what are our tips for investing in real estate in Poland?

What to Invest in?

Currently, in most cases, it’s the small one-bedroom or two-bedroom apartments that will provide you with a steady return on your investment. Bigger apartments and houses are still profitable, but you need to consider their location more thoroughly. But don’t worry – we’re here for you. At Prospercity, we will help you find, adapt and rent a property in Poland!

Where to Invest?

Purchasing a property in Cracow is a larger real estate investment than doing so in, let’s say, Kalisz. This is because the prices differ significantly between larger and smaller cities. So, where should you invest?

If you’re purchasing a smaller one-bedroom apartment with the aim of renting it, go for cities like Cracow, Warsaw, Gdańsk, Szczecin, Łódź – they will bring you the highest return on investment. If you want to invest in luxury apartments, larger cities will still be a good choice, though remember that the overall ROI will be lower than for one-bedroom apartments. At Prospercity, we specialize in rentals for students, so we can help you get the most profit from properties in large student centers like Cracow!

You should also pay attention to the city district. If the apartment is well-connected with the city center or local universities, you are more likely to have a steady flow of tenants. Here, it’s worth remembering that most young people commute by public transportation, so locations that are well-connected for car owners might not always be the perfect choice if you target students.

How to Invest?

There is no straightforward answer to this question. You’ve got a few options when it comes to investing, namely:

• Flipping – Real estate flipping is quite profitable in Poland if you have the money to purchase properties right away. Don’t try it on your own, though – it’s best to work with a professional real estate agency to avoid buying real estate that is in debt or comes with ownership conflicts. Also, remember about the sales tax when calculating your profit – you need a real estate appraiser to define the value of your property for this sake.
• Renting – You can also try renting an apartment or house in Poland, especially in cities like Cracow. In such cases, it’s best to target particular groups of people, for instance, students. You might want to look for properties with high yields to cover any renovation costs that might be required afterward.
• Keeping the property – Considering how fast real estate values go up in Poland, purchasing a property and doing… nothing with it might be a viable option. Many people believe that it’s much more profitable than renting since you don’t need to renovate the apartment every year or two. However, in this case, you won’t see the profit right in your bank account; instead, it will be woven into the overall value of your real estate.

The Takeaway

We hope that we’ve dispelled any doubts about investing in real estate in Cracow, Warsaw, Gdańsk, or any other Polish city. If you’re looking for the best properties to invest in or just got your apartment that you want to rent out, feel free to contact us – we will be happy to help you!