Rental of residential properties in 2023

Since January, 2023 two significant changes to the rules on taxation of residentials rentals will come into force. Till the end of 2022 property owners who rented their residential properties not as a part of their business activity had the freedom to choose type of taxation, either under general rules applying to income tax, ie. according to the progressive tax scale, or by applying flat tax without right to deduct costs. In 2023 such tax payers will not be able to tax the income under according to the tax scale. The only form of taxation available to them will be a flat tax with no possibility to deduct any costs such as eg. expenses for renovations, depreciation write-offs or mortgage interest. Income from private rental will be taxed at the rate of 8.5% of income under PLN 100,000 and 12.5% on the excess over PLN 100,000.

Additionally, those taxpayers who rent residential premises as part of their business activities will not be able use depreciation deductions as deductible expenses. This new rule will apply to broad range of residential properties rented out both by personal and corporate income taxpayers.