Law / Financing in Poland [12]


Zoogle, thanks for the laugh. I don't believe there is any process in Poland for which the expression "and off you go?" applies.

Certainly it is far more difficult to obtain a Small Business loan in Poland than in NA, but not impossible. Right now is not the best time to be looking for such a loan, due to the global credit crunch and the acceleration in interest rate rises on PLN. (don't believe anyone who tells you that Poland is not indirectly affected by the credit issues in the US)

Additionally, it is very difficult for a self-employed non-Pole to receive any credit in Poland regardless of how good your credit history is, or how good your business plan is. You may actually find it easier to obtain a loan in USD from NA, with better terms, for setting up a business in Poland. With a depreciating USD, this could be your best bet.

Law / Does anyone have experience of getting a karta pobytu from Krakow? [13]

I did this in Kraków last summer, it wasn’t too painful. Without any problems the process should take about a month.

As an EU citizen you will need to apply for a “ZAŚWIADCZENIE O ZAREJESTROWANIU POBYTU OBYWATELA UNII EUROPEJSKIEJ”, not a „KARTA POBYTU CZ£ONKA RODZINY OBYWATELA UNII EUROPEJSKIEJ”. The latter is for non-EU family members of a Polish citizen.

My recollection of the process is:

1.) I was temporarily melded locally
2.) My Polish wife called up the office in Krakow (the local melding office gave us the direct number). The person in Krakow directed us to a website where the application forms are located. I filled out 2 copies of the forms (they are in Polish and English)

3.) I brought the forms and my Irish passport to Krakow. (I don’t remember if I also had to bring the Polish version of my marriage certificate) The office had a queue of about 200 people going down the street. This is not the right queue; push your way through the door (Polish style; throw your shoulder into everyone, don’t apologize). The office is on the first floor. I waited about 30 minutes.

4.) Submit the forms, sign a few papers, (have a few photocopies of your passport with you, otherwise they will send you back outside to hunt down a “ksero”). They told me to call back in 30 days to confirm all was okay and then I could come and pick up my Karta.

5.) During those 30 days the office is supposed to ensure that you are not a threat to national security by checking with the Interior Ministry, the Polish Police, and your home country police. In my case the local Police showed unannounced at the door one day. They had a list of questions that my wife translated. Mostly to do with work and education experience. (which in some way is used to evaluate what kind of threat you pose to Poland)

6.) I get a letter in the post to call the office. For some reason my Irish passport does not list the city of my birth, and they did not pick up on this when I first presented my passport. This rocked their world! There was no-way that I could get a Karta without this. I had to go back to Krakow with other documents proving my city of birth.

7.) Two weeks later I get a letter in the post. Come pick up your Karta, and bring 1 zloty with you. I had to wait about 30 minutes again to get the card. When I get to the desk they already had my "file" right there with them; a folder with my name on the front and about 15 pages of paperwork inside. Creepy! I tried to get a peek at the contents, but they were having none of it.

8.) I then bring my new Karta to the local melding office so I can now be permanently melded. They have no idea what the Karta is and we had to get the office from Krakow on the phone to verbally abuse them before they gave me my permanent melding, which is just a tiny slip of paper with a stamp on it. No ID cards for foreigners.

...and one more thing. I read an article recently in which Mr. Tusk promised to get rid of the whole melding process by close of 2008 as it is just pointless bureaucracy. Maybe I misunderstood the article though?

Real Estate / US tax obligations on Polish real estate [2]

Mariola, The situation is pretty much the same as if the property was in the US. (read IRS publication 527). You should keep hold of all receipts, invoices, contracts, etc regarding expenses and income for the property. You will report all income on schedule 1040E, and will only be asked to produce that documentation if audited by the IRS.

Of course you will need to do the same thing when declaring the income for the Polish tax authorities (except on a monthly basis). If you are using a Polish accountant to do this, then they will insist on keeping the originals of all of theses documents. That is fine, make copies for yourself, and if you are audited get the originals from your accountant.

All the same rules apply in terms of expenses / repairs / improvements / deduction of mortgage interest. However, you must depreciate by the ADS method (40 years) not GDS. Everything must be converted to USD in the year of the transaction. (If you have taken out a non-USD mortgage you need to be aware of a few more things)

Sale of the property – You should have already established a depreciable basis for the property when reporting your rental income. You should have the original notarised Polish Contract for the purchase to back this up (as well as proof of any costs incurred during the purchase, and cost of improvements). When you sell the property you will have a copy of the final contract which shows the sale price. That’s all you need. (Unless you took out a non-USD mortgage)

I’ve had no luck finding a Polish accountant who can appreciate what is required of US tax payers. I am using an accountant in Krakow for my Polish taxes, and keep a copy of everything for myself to do my US taxes. I’m quite happy with the job they’ve been doing and if I ever need a copy of anything they are quick to post it over.

Oh yeah, I'm not an accountant or tax advisor. Otherwise I would be asking you for your first-born for the above information. Don’t take my word. Read the IRS publications, and call the IRS help lines if in doubt.

Real Estate / Article: Budimex calls for stagnation in 2008 residential property market [8]


I wonder if that will be the case. I live 30 kilometers outside of Kraków. The local market for flats is now just finally taking off as so many people have been priced out of Kraków. If Kraków were to become more affordable over the next 12 months it could be bad news for the small local developers.

It will be interesting to see how this all goes down. The economic news out of the US gets worse by the day, and now it seems that there is very little support for the Asian decoupling theory. What's bad for the US will be bad for Poland.

Fundamentally I think the housing market in Poland is sound; domestically driven, still a shortage of housing, credit is not (nor was ever) easy to come by, a booming economy, remittances from abroad, pro-business government, dramatic wage inflation in the private sector, strong currency.

However, I am a bit skeptical of all of these off-plan projects due to complete in the next 24 months across all of the major cities. If the "foreign" investors decide en masse to take their chips off the table at the same time it could be very interesting. Just look at Miami.

Real Estate / Article: Budimex calls for stagnation in 2008 residential property market [8]

I think I wasn't clear enough in my summary of the article. (I'd post the whole thing, but it's against the forum rulles): Budimex expects a stagnant period of 1-2 years on the residential market. They believe they are well prepared to weather this period, but may decide to hold back on some new projects. However, they expect that this downturn will have a more serious impact on smaller developers: " "The year 2008 could be difficult for some developers, especially smaller ones which were aggressive in buying grounds." "

So if Budimex is correct, that there will be an over-supply of new build apartments in 2008 - 2009, what will this mean for the many investors on this forum who have recently purchased or put down deposts on flats to be completed in the next 24 months?

Will they see some projects that they have already placed deposits on come to a halt? Will they have trouble getting those deposits back in a reasonable time frame

When these projects complete will the flats be worth less than what they paid for them?

Real Estate / Private investors in Poland to sell a property [6]

I've purchased two properties, a house and an apartment, directly through the sellers. It didn't involve too much more work than when I've used estate agents (this is on the purchasing, not selling side of the transaction), but you do need to have confidence in the notary you are using. Overall it probably saved us about 5-6% on the deals ((our 2.5% agent fee + the sellers 2.5% agent fee)*22% VAT).

As a seller, I see little benefit in cutting out the estate agent. You can negotiate their fee and terms upfront and use multiple agents to find you the best buyer on the market. If an estate agent is not used, the purchaser will try hard to negotiate that savings away from you.

Adrian, can you tell me a little more about the property; region/city, size, condition, price? Poland is a big town; you won’t be giving away any secrets. :-)