Sunday, 30 January 2011

RE-calculation (Real Estate taxes)

Clearing out one of those old items, this from 9th December last year and again from Polish Market Review. It commented about Poland's position in a 2010 report on tax on the sale and rent of domestic and commercial property in various countries. In summary:

Taxand: Poland places light tax burden on sale of property

Poland charges one of the lowest taxes on the sale of real property, according to a report by Taxand, an international network of tax advisory firms.

Commercial-property owners in Poland pay an effective tax rate of 4.28% of the selling price, the third-lowest rate among the 23 countries covered by the study ...

The effective tax paid by homeowners [selling] in Poland, at 11.04%, is lower than in all the other countries except two ...

Taxand's website publications page links to a digital edition of the report, where the study is shown on pages 28 to 31 of the viewer numbering. This shows Polish tax rates of:

Home for sale - 11.04% (3rd lowest of 23 countries)
Flat for sale - 9.62% (4th lowest)
Home for rent - 25% (5th lowest)
Commercial sale 4.28% (3rd lowest)
Commercial Rent - 15.67% (6th lowest)
Hospital - 29.35% (8th lowest)

Poland's VAT rate rose 1 percentage point for 2011, which I assume will affect these, but them other countries may have changed rates as well. The clear message, however, is that Poland is a good place for buying property, whether private or commercial.

I'm not sure how commentators who advocate transfer of wealth from the rich to the poor, such as Beyond the Transition, will view this. However, a public debate on reducing the size of property defined as 'social housing' for VAT purposes - it qualifies for a lower tax rate, and such a change would therefore raise the tax level for many houses (but not flats) on the market - quickly led the PiS (I think) government to quickly deny that it had ever considered the proposal. (How this affected the cost of our house would have depended on whether the integral garage space was part of the house measurement size.)

In any case, I can't help but think significant changes in housing taxes would undermine the still low-level state of the domestic, built property market, reducing necessary growth in housing infrastructure. I also suspect that, at least compared to the UK, low income groups have a much higher level of property ownership, especially in the poorest, rural areas. The phenomenon around major urban areas of poor small farmers finding that their land is a significant source of non-farm income, is a prospect that still awaits much of the country. However, it can be widely anticipated at some time in the future, possibly not too distant. Increased taxes might therefore effectively undermine increased balance of wealth, should that be your objective.

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