Capital Gains Tax on Property Sale in Poland: The 5-Year Rule Explained

If you sell a property in Poland, you may owe capital gains tax on your property sale in Poland — charged at a flat rate of 19% on the income (selling price minus acquisition costs). However, the most important thing to know is that a critical exemption exists: if you sell at least 5 years after acquiring the property, no tax is due at all. This single rule shapes most foreign investors’ exit strategies.

How Capital Gains Tax on Property Works in Poland

In Poland, income from the sale of real estate is treated as personal income and taxed under the Personal Income Tax Act (PIT). The tax applies to private individuals — if you sell through a company, different corporate tax rules apply.

Key principle: the 5-year rule. If you sell a property more than 5 years after the end of the calendar year in which you acquired it, the sale income is entirely tax-free. This is the most powerful tax planning tool available to property sellers in Poland.

Example: you purchased an apartment on 15 March 2020. The 5-year clock starts from 31 December 2020. You can sell tax-free from 1 January 2026 onwards.

When Is Capital Gains Tax Due: The 5-Year Rule in Detail

The 5-year period runs from the end of the calendar year in which you acquired the property — not from the exact acquisition date. This means:

• Property acquired in January 2021 → 5-year period ends 31 December 2026 → tax-free from 1 January 2027
• Property acquired in December 2021 → same result: tax-free from 1 January 2027
• Property acquired in January 2020 → tax-free from 1 January 2026

The practical implication: buying in late December vs. early January of a given year has no difference for the 5-year calculation. Selling just before the 5-year mark is a costly mistake — plan your exit date carefully.

Calculating the Tax Base

If you must pay tax (sale within 5 years), the taxable income is: selling price − (acquisition costs + documented improvement costs + selling costs).

Deductible acquisition costs include: the purchase price as declared in the notarial deed, PCC tax paid, notary fees, court registration fees, and real estate agent commissions. Documented improvement costs (receipts required) are also deductible. Interest on a mortgage used to purchase the property is not deductible for capital gains purposes.

The Own-Residence Exemption (Ulga Mieszkaniowa)

Even if you sell within 5 years, you can avoid tax entirely by reinvesting the proceeds in another residential property for your own use — the “own-residence relief” (ulga mieszkaniowa). Key conditions:

• You must reinvest the entire proceeds (not just the profit) in residential real estate used for your own housing purposes
• Reinvestment must occur within 3 years of the end of the calendar year of the sale
• The relief applies proportionally if you reinvest only part of the proceeds
• Qualifying uses: purchasing another apartment/house, building a house, repaying a mortgage on your own property (taken before the sale)

Capital Gains Tax for Non-Residents

Foreign tax residents (people who are not Polish tax residents) selling Polish property are also subject to Polish capital gains tax. Poland has the taxing right over Polish real estate gains regardless of the seller’s country of residence. However, double taxation treaties may provide partial relief — and the 5-year exemption applies equally to non-residents.

Non-resident sellers must file a PIT-39 tax return in Poland by 30 April of the following year and pay any tax due by the same deadline. CGO Legal assists non-resident clients with Polish tax compliance as part of our real estate legal services.

Frequently Asked Questions

Related: PCC tax when buying property in Poland | Real estate investment in Poland | Inheritance of real estate in Poland