Renting apartments as part of business activity with a lower real estate tax rate

In a groundbreaking judgment dated November 15, 2023, the Provincial Administrative Court in Warsaw (case file no. III SA/Wa 1346/23) ruled that entrepreneurs engaged in long-term residential rental activities for individuals should pay property tax at the rate applicable to residential properties, rather than at the highest tax rate for properties used for business purposes.

What is the property tax rate for renting residential premises?

The case involved an entrepreneur conducting long-term rental activities for individuals who used the premises for their housing needs. The taxpayer inquired whether the rented premises should be taxed at the highest property tax rate for buildings and premises used for business activities or at the rate appropriate for residential buildings and premises. Tax authorities consistently held that such properties are used for business purposes because they are owned by the entrepreneur, who generates income from renting them out.

Jaka stawka podatku od nieruchomości dla wynajmu lokali mieszkalnych?

What was the court’s decision?

The Provincial Administrative Court in Warsaw ruled that it does not matter if the owner of the rented apartment is a company. What matters is who the premises are rented to. If the tenant is using the apartment for their own housing needs, the lower property tax rate applies. However, it is worth noting that a completely different judgment was issued by the Provincial Administrative Court in Gliwice (judgment of October 19, 2023, case file no. I SA/Gl 857/23). It concerned taxpayers engaged in business activities who rented out a residential part of a tenement house to individuals satisfying their own housing needs. According to the Provincial Administrative Court in Gliwice, the highest rate applicable to properties used for business purposes is appropriate in such cases.