How to settle the purchase of company land in the KPiR?

Are you an entrepreneur and you are considering building a new headquarters or extending your premises? From a legal point of view, nothing stands in the way. From a practical perspective, you must have land. If you own land, it remains to consider how to settle its purchase for tax purposes. Check how to settle the purchase of company land!

Land in the company as a fixed asset

The regulation of the Council of Ministers of October 3, 2016 on the Classification of Fixed Assets (KŚT) clearly indicates that land is included in group 0. This means that they can certainly be considered a fixed asset in the company. At the same time, the taxpayer should remember that a fixed asset can be considered a fixed asset that:

• is owned or jointly owned by the taxpayer,
• was purchased or manufactured on its own,
• it is complete and fit for use on the day it is accepted for use,
• its expected period of use in the company longer than a year,
• it is used by the taxpayer for the purposes related to his business activity or put into use on the basis of a rental, lease or leasing agreement.

In accordance with the Personal Income Tax Act, fixed assets include in particular:

• real estate (including land),
• machinery,
• means of transport,
• devices.

The issue of land is clarified by the Civil Code. In art. 46. ​​we read:

Art. 46. § 1 Civil Code Act: Real estates are parts of the land constituting a separate subject of ownership (land), as well as buildings permanently connected with the land or parts of such buildings, if under special provisions they constitute an object of ownership separate from the land.

Importantly, land constituting a separate object of ownership should be treated as independent real estate.

Purchase of company land - settlement

The entrepreneur must prove his land in the register of fixed assets. For this purpose, their initial value should be established. In the case of purchase, it will be the purchase price (the price payable to the seller increased by any purchase costs - interest on the loan, notary fees, etc.). If the land was acquired by donation or inheritance, the initial value is determined based on the market value on the date of acquisition, unless the donation agreement or the free transfer agreement specifies this value at a lower amount.

Important! After accepting the land for use, interest on the investment loan will be charged directly to costs.

It is worth noting that pursuant to Art. 22c points 1 of the Personal Income Tax Act, the value for the purchase of company land will not be depreciated. Therefore, the purchase of land for development will not constitute a tax-deductible cost for the entrepreneur through depreciation write-offs. Expenses for its acquisition will be tax costs only in the event of its disposal for consideration, in accordance with Art. 23 sec. 1 point 1 lit. a of the Personal Income Tax Act.