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Valuation of Inherited Real Estate in Poland for tax purposes?

16 Mar 2015 #1
Greetings from Spain,

My wife's grandmother has recently passed away and my mother-in-law has inherited a flat (all the paperwork with the court is done). She plans to keep the property for 5 years, in order to elude Capital Gains Tax.

The property is located in a rural area in Małopolska and we believe the passing of time will only detract to its value. My take is, we would first have to determine if a capital gain is to be made, in order to decide if the 5 year waiting period makes sense.

I have looked thoroughly on this forum and on the Internet, and have not found the method or process to valuate (for tax purposes) inherited property in Poland. Can anyone help me with it?

Down where I live, a market value is assigned by the heirs, which has to be backed by independent appraisals and can be challenged by the Tax Authorities.

Thanking you in advance,

mcm1 2 | 81
16 Mar 2015 #2
My understanding is that within the 5 year period then Capital Gains Tax is 19%. after 5 years there is no tax to pay.
OP blownturbo
17 Mar 2015 #3
Thank you very much for your answer, that is basically what my wife's mother says and the reason to delay the sale. However, my question relates not to the exemption to pay taxes, rather the base to determine if there is a capital gain to effectively tax:

Capital gain= (Sale price-sale expenses)-(Acquisition price+acquisition expenses)

When you acquire instead of inherit property it is quite simple to determine, but my question lies on what acquisition price should be taken into account for an inherited property.
mcm1 2 | 81
17 Mar 2015 #4
My understanding is the Capital Gain would be the current market value of the property when sold......not what it is actually sold for. No doubt several estate agents would give you an idea of what the property is worth, this then goes to 2 different local council departments to see if they agree.
pigsy 7 | 305
17 Mar 2015 #5
Why dont the OP call or meet a professional accountant for advice.
OP blownturbo
18 Mar 2015 #6
Pigsy, my mother-in-law has already asked an accountant, getting the "wait for 5 years" response, but that does not answer the question about how to determine the market value of an inherited property (at the time of inheritance) in order to calculate an eventual Capital Gain for tax purposes if you are planning to sell.

All I want to see is today's market value Vs. inheritance value, as I believe there is no Capital Gain to tax, so why wait?

I have also reached a Tax Advisor through Internet in Poland, who has proposed exorbitant fees for a question I believe is quite simple to answer, that is the reason I finally posted here, as I believe what is happening to my mother-in-law is quite common. If anyone knows a Tax Advisor, please let me know.

mcm1, I understand you mean I need to get a valuation and subsequently verify the result with 2 different authorities?

Thanks a lot
pigsy 7 | 305
18 Mar 2015 #7
It can be determined firstly by asking any realtor how much they can sell it for(you dont have to list it with them just ask),by a property assesor who might charge you and at the end tax department also have there assesment also because some people buy it in cash and declare low price to avoid tax.

A tax advisor I think is a wrong person to ask if you are evaluating your property.
OP blownturbo
18 Mar 2015 #8
Thank you very much, perhaps I am not being as clear as I want to be, let me try and exemplify my question:

- My grandmother passes away in 2014, I inherit a flat in a rural area in Małopolska and I want to sell it, I post a few advertisements on Internet and receive some interest by potential buyers. Let's assume I consult with realtors and I select an offer which adjusts to the market value of the area.

- I sell the flat in 2015 for 80.000 Pln, no cash, all paid through bank wire. As not even 1 year has passed since inheritance, I have to pay Capital Gains Tax at the rate of 19% on my 2015 PIT.

- I want to calculate the Capital Gain obtained= (80.000 Pln-acquistion price)*19%= tax to pay.

I inherited the flat, what value should I consider to calculate tax?, that's why my question goes to a Tax Advisor:

a) Market value in 2014, when I inherited it?, then I would get a valuator to certify it and use that value in my PIT.
b) Zero, as I inherited and did not pay for it? so I pay taxes solely on the disposal price.
c) Other
mcm1 2 | 81
18 Mar 2015 #9
I thought I was your situation I believe it will be option 'b'
You will pay 19% of the agreed value of the property when sold- within 5 years of inheritance, there are no deductions.
It might be possible to use your own permanent country of residence if the tax regime is to your benefit, prepare to pay heavily for legal advice, ours has cost about £8000 plus £1600 for the two wills to minimise our future UK tax situation, this will change to Polish rules once we have owned the property for 5 years.
OP blownturbo
19 Mar 2015 #10
mcm1 thanks a lot for your valuable information, at first I was not clear you were implying zero value for inherited property, as acquisition value.

It seems passing on real estate to your heirs is tremendously penalized in Poland, as inheriting a 80.000 pln savings account, would not be taxed through capital gains on PIT.
8 Jun 2017 #11
I have received my capital gains tax bill from Poland but they have only give me 7 days to pay £7000 ! This is the first bill I have got and it's about £2000 more than I expected

I have a translator who is calling them on my behalf to see if I can pay in instalments, I have £2000 saved up towards this bill (I was expecting the bill next year as i sold the property last February (2016)

Does anyone know if they will accept a payment plan?
I am a U.K. Resident by the way and sold the flat which was left to me by my grandfather (I am the only living hier)
Buggsy 8 | 98
9 Jun 2017 #12
@Mojo79 If you don't mind me asking- was that £7000 or 7000zl and were you taxed on the actual value you sold the flat for back in 2016 or you were taxed

on their estimated value? And how much did you sell it for in zl?

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