Private rental of an apartment by spouses and tax

The persistent housing prices on the real estate market mean that both people who do not conduct business activity and entrepreneurs decide to rent a flat or a business premises more and more often. Accordingly, the lease agreement may be concluded both as part of a business activity and outside it. How private rental is taxed and accounted for is written below!

Private lease as one of the sources of income

Pursuant to Art. 10 sec. 1 point 6 of the Personal Income Tax Act, the sources of income include, inter alia, rental, sublet, lease, sublet and other similar agreements. Accordingly, private rental income is generated when the payment is actually received or in accordance with Art. 11 sec. 1 of the PIT Act - putting them at the disposal of the landlord.

Importantly, if the contract indicates that the tenant is obliged to pay the operating costs, the operating fees incurred by him should be excluded from the rental income, such as: charges for water, gas, electricity or garbage collection, as in principle payments from the above-mentioned sources do not constitute the landlord's income, but payments aimed at covering liabilities towards third parties - utility suppliers. This mainly applies to a situation in which the tenant is obliged to regulate them.

Such a position is confirmed by the interpretation of the Director of KIS of April 4, 2018, No. 0115-KDIT3.4011.79.2018.2.DR:
"(...) In this position, we read that" (...) The lessor's income from the lease will not include expenses (fees) incurred by the lessee related to the subject of the lease (e.g. real estate tax), if the contract shows that the lessee is obliged to bear them. Additional fees incurred by the lessee in connection with the use of the plot do not fall within the concept of benefits in kind and other gratuitous benefits referred to in Art. 11 sec. 1 of the Personal Income Tax Act, as well as they do not cause a property gain on the part of the lessor (...) ”.

Another exclusion concerns the deposit securing the subject of the lease. The revenue does not arise if the deposit is returned after the expiry of the lease. The exception is when the owner retains the deposit in whole or in part as a result of incurring losses - then he shows it as income.

Forms of taxation of private lease

A natural person, deciding to rent a private flat or house, has the right to choose between two forms of taxation:

• general rules (tax scale: 17% or 32% of the surplus above PLN 85,528),

• lump sum registered (8.5% or 12.5% ​​of the surplus above PLN 100,000).

The choice of the form of taxation is made by making the first advance payment on account of the revenues obtained from private rental in a given year. The selected form of taxation will be binding from that moment until its change in the following year, if such a decision is made by the taxpayer.

The general principles are a form of taxation that every taxpayer is entitled to under the law, therefore it is not necessary to inform the office about the use of this form of settlement.

If the taxation of private rental is chosen on general terms, the landlord has the option of deducting from the revenues obtained costs related to the rental, such as:

• depreciation write-offs from the subject of the lease,

• purchase of home furnishings, household appliances and furniture,

• operating costs and charges, if the tenant is not obliged to pay them under the contract.

With regard to private lease taxed with a flat rate, in accordance with the provisions of art. 9 sec. 4 of the Lump-sum Income Tax Act, the form of settlements is no longer submitted to the tax office:

"In the case of achieving the revenues referred to in Art. 6 sec. 1a, as tantamount to making a choice of taxation in the form of a lump sum on the revenue recorded for a given tax year is considered to be the first in the tax year lump sum payment on revenue recorded in this respect, and if the first such revenue the taxpayer achieved in December of the tax year - submission of a tax return, referred to in Art. 21 sec.2 point 2 ".

If you choose to tax in the form of a lump sum, it is not possible to take into account the costs, the amount actually received - paid by the tenant is subject to taxation.

During the year, it is necessary to pay advances for income tax on the lease. Both in the case of the general rules and the recorded lump sum, advance tax payments for a given month must be paid by the 20th day of the following month. In the case of taxation on general principles, revenues are included in the annual tax return PIT-36 by April 30 of the next tax year or in the case of taxation in the form of a lump sum in the tax return PIT-28 by the end of February of the following year (in 2021, until March 1). ). Taxpayers who obtain revenues from private rental can also take advantage of quarterly settlements. In the case of quarterly tax settlement, payment is made by the 20th day of the month following the quarter to be settled, and for the last quarter, on the date of submitting the annual tax return. The main condition for taking advantage of quarterly settlements is not exceeding the limit of revenues from non-agricultural business activities of EUR 200,000 for the previous year (the limit for 2021 - PLN 903,060), for revenues obtained independently or in the form of a company.

Spouses as tenants

As a rule, if the subject of the lease belongs to the joint property of the spouses and there is joint property between them, then they may settle the rental income in half. However, the legislator also allowed for a different method of settlements. Namely, in accordance with Art. 8 sec. 3 of the Personal Income Tax Act and Art. 12 sec. 6 of the Act on flat-rate income tax on certain revenues earned by natural persons, if the subject of the lease belongs to the personal property of one of the spouses, there is no joint ownership. If the spouses submit an appropriate declaration to the competent head of the tax office, one of them will be able to settle all private rental revenues. It should be borne in mind that the declaration does not have to be signed by both spouses, it is enough for it to be signed by one of them. In the event of resignation from joint settlement of the lease (by one spouse in full), a written notification is also submitted with the signature of one or both spouses.

Such a position was confirmed by the Director of the Tax Chamber in Bydgoszcz in the individual tax ruling issued on December 12, 2016, ref. No. 0461-ITPB1.4511.838.2016.2.HD:
"The choice of the principle of taxation of all income by one of the spouses expressed in the declaration referred to in paragraph 6, applies when making payments on a lump sum on the recorded revenues for the entire tax year, unless as a result of divorce or a decision by the court of separation there was a division of the joint property of the spouses and the subject of the contract fell to the spouses who were not obliged to make payments on the lump sum from recorded revenues (Article 12 (8) of the Act on flat-rate income tax on certain revenues generated by natural persons). According to the wording of Art. 12 sec. 8a above of the Act, the choice of the principle of taxation of all income by one of the spouses, expressed in the declaration referred to in paragraph 6, also applies to subsequent years, unless by January 20 of the tax year, the spouses notify the competent head of the tax office in writing about the resignation from taxing all income by one of the spouses. "

The signature of one of the spouses on the declaration / notification is tantamount to authorizing this spouse to make the declaration on behalf of both. Both the declaration and the notification with one signature are submitted under pain of criminal liability for false testimony.

In the event of a change in the form of settlement of joint rental income by one of the spouses or jointly, the declaration or notification must be submitted by the 20th day of the month following the month in which the first rental income in a given tax year is obtained or by the end of the tax year, if the first such income is obtained in December of a given tax year.

The above-mentioned declaration / notification does not have a fixed form, so it can be prepared in any way, maintaining the official form and indicating the data of both spouses.

A declaration on the settlement of a private lease by one of the spouses expires upon the division of property as a result of divorce or separation. The obligation to pay the tax will be transferred to the spouse who will receive the rights to the premises covered by the lease.

The notification about the change in the form of settlement of the lease by one of the spouses should be submitted in the new year by the 20th day of the month following the month in which the first private rental income constituting joint property was obtained in a given year.

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Example 1.

In 2018, before the first income was obtained, the spouses who have joint property and earned income from private rental filed a statement on the settlement of the lease by only one spouse. From 2019, however, they would like to settle accounts separately. They received their first rental income in May 2019. By what deadline should they submit a notification to the tax office?

Taxpayers (one of the spouses) should submit a notification to the tax office on the change of the form of settlement by June 20, 2019.

It should be remembered that in the case of a private lease made by spouses, the limit of the 2nd tax threshold (in the case of taxation under general rules), as well as the limit of the flat rate taxed at the rate of 8.5%, applies to both spouses, not to each of them separately. The principle of the 8.5% rate limit for the lump sum also applies to a situation in which the spouses tax the rent separately, applying both the recorded lump sum and the general rules.