Poles are investing in real estate on an unprecedented scale to protect their savings against inflation, which reached the level of 5.4 percent y/y in August this year. The JLL report "Residential market in Poland – Q2 2021" indicates that developers operating in Warsaw, Kraków, Łódź, Poznań, Wrocław, and the Tri-City sold a total of 39,000 flats in the first six months alone, i.e. by 7.2 percent more than in the first half of 2017, the best so far. The buyers’ profits and advantages are endangered by The Polish Deal now.

According to the provisions of the project, the owners of flats and premises earning money for rent will not be the beneficiaries of the Polish Deal, because next year they will have to pay a lump sum. Aleksandra Kalinowska, a tax advisor, and Partner at Andersen Tax & Legal explained, that in practice it will not be possible to use the tax-free amount. Moving landlords to a flat rate also means that they will not benefit from the increase in tax thresholds as they do not apply to the flat rate. Importantly, Poles who have just invested in flats or premises, or who plan to do so soon will not be able to settle any costs, e.g. renovation or purchase of equipment. The costs will also not be incurred in connection with the purchase of the premises, which are currently settled through depreciation write-offs. As a consequence, the owners will face a flat-rate tax of 8.5 percent for revenues up to the amount of PLN 100,000 and 12.5 percent from the surplus.

This is another factor that may lower the profitability of investing in premises for rent. It may turn out to be simpler and safer, for example, to invest in social networks – that is, being one of the investors, e.g. of a school or kindergarten built in cooperation with the local government.

"We only invest funds that we have, we take off our obligations related to renovations, searching for tenants or settlements, and in return, we receive a 6-7 percent annual rate of return and security for the invested funds in the form of real estate," Mateusz Krajewski, President of the National Education Operator, added.

(WBJ)