FAQ


Why invest in Poland/Kraków?
What type of investment is recommended?
What is the rental yield?
Can Poland continue to deliver property price appreciation?
Is there demand on the rental market?
Is there tax on rental income?
What is the capital gains tax?
Can foreigners within the European Union buy property in Poland?
Does an investor have to establish a company in order to buy property in Poland?
What is the cost of maintaining an apartment in Poland?
Costs related with purchasing property in Poland
How long does it take to complete a purchase on a property in Poland?



Why invest in Poland/Kraków?

Poland joined the European Union, May 1, 2004 gaining great opportunity to benefit from its economic potential to a much higher degree. Today Poland has expanding economical growth of GDP reaching 4-6% yearly and positive political stability, which is looking even more promising after the recent “sejm’ and “senat’ elections with Poland's vic69torious pro-EU and business-friendly Civic Platform (PO) winning parliamentary elections. Poland has attracted the attention of the international community as a sure and safe place for investment purposes. In 2006, Poland proved to be an important beneficiary of capital from the global real estate investment market. Warsaw, the capital city with over 2.8 million inhabitants has become one of the fastest growing financial and corporate centers in the world. However it is Krakow that is said to be the icon of Poland, the most beautiful city in Europe and the most dynamic location in Eastern Europe. Krakow is a tourist hot spot, but not only, it’s still hot for property investors who can count on low risk and highest growth potential of real estate opportunities in Europe.


What type of investment is recommended?
One that will show positive and risk free capital gain within mid-term 3 to 5 year duration. Apartments and commercial offices, these will have a high demand location for being rentable at a premium. The centers of both Kraków and Warsaw show great demand for commercial and residential property and it’s Kraków that attracts overseas international companies for space, infrastructure and employees. Land is also being purchased for development in most attractive locations in center, suburbs of the city as well as surrounding regions (close by villages). Despite the fact that property in Krakow isn’t as cheap anymore demand for property in Poland is expanding and investment potential keeps growing.

What is the rental yield?
A yield of 4% to 6%. This will also depend on size of the unit and its location.

Can Poland continue to deliver property price appreciation?
Poland’s property market is one of the most dynamic ones in Central and Eastern Europe; in 2006 prices have gone up by over 50% creating perfectly favourable capital apprectation for investors and long term potential for increasing yeilds. But can this situation continue? Yes. There are many reasons why it is still worth to invest in the Polish property market: incentives offered by the Polish Government to investors who set up a company here, rebates of real estate tax, reimbursement of land costs for certain types of investors and most importantly strong economic growth – just last year itself foreign investment flow in Poland exceeded 6 billion Euro - that is an essential asset in the success of any investment in Polish Real Estate Market.

Is there demand on the rental market?
Krakow has an increasing population because it has a constant inward flow of talented migrants from elsewhere in Poland. Naturally enough this creates not only an increase in demand for residential real estate (mainly to rent) but it creates a situation where those demanding space can afford to pay more for it. In the most popular parts of Krakow the price per square meter of real estate has gone up dramatically in the past couple of years meaning that investors have to pay out more to get quality accommodation – but at the same time they have a stronger base to whom they can market their rental property and this market base will pay good money for long term lets.
Is there tax on rental income?
Yes. Up to 37 000 pln there is a flat tax of 19%. Polish tax payable by an Irish citizen under the laws of Poland and in accordance with the Agreement for the avoidance of double taxation, whether directly or by deduction, on profits, income or gains from sources within Poland shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Polish tax is computed (article 24 of the Agreement).


What is the capital gains tax?
If real estate is sold more than 5 years after it was purchased the capital gain is exempt from tax.
Individual's capital gain from sale is taxed at a final tax rate of 19%.
Please note that most of the costs associated with the sale of property in Poland are covered by the purchaser except agency fees and of course capital gains tax.

Can foreigners within the European Union buy property in Poland?
Yes. There are no restrictions for European Union or EFTA nationals to purchase and own any real estate providing it is less than 0.4 hectare (i.e. about an acre) in urban areas. For larger plots, farmland and forests authorization is required from the Ministry of Internal Affairs. After applying, the Polish Ministry of Internal Affairs will issue ‘Permit Promise’, valid for six months allowing them to purchase property subject to the criteria specified within this timeframe.

Does an investor have to establish a company in order to buy property in Poland?
No, unless a specific permit for a property has been denied. This however is very unusual and very rare.


What is the cost of maintaining an apartment in Poland?
Property tax is virtually non-existent. Most buildings have a “czynsz” this is an association fee to all tenants in the building and covers most maintenance costs.
This usually is based on the unit and its size and will vary from building to building. At present it’s around two to three pln per meter per month. In most circumstances this is payable by the lessee (renter) of the apartment.Administration fees include:
• Hot & Cold water
• Heating
• Refuse collection
• Security
• Lifts
• Renovation fund
• Garage / Parking
• Cleaning


Costs related with purchasing property in Poland
About 3% agent’s commission,
1-2% notary fees,
Court fees of 200 pln,
Stamp duty is set at 2% of the property value,
VAT on new-build property is currently at 7%, but this is due to rise to 22% from January 2008.
There is no VAT on property more than five years old.
Please see finanse on our website for purchase calculator.

How long does it take to complete a purchase on a property in Poland?
Depending on type of property and buyer/seller situation (finances in place, POA’s and other issues) transaction can be completed in few days time or it can even take up to 2 months time or more. Here’s a run down on the process:

Buying assistance
The buying process can be carried out by appointing a local lawyer through an executed Power of Attorney (PoA).
If you grant POA to a local lawyer you need The ‘apostille stamp' which basically internationalizes Power of Attorney allowing to be used officially by the holder in a foreign country.
Preliminary contract
There are two contracts involved in a property purchase in Poland. The preliminary contract commits both parties to the sale, and is accompanied by a deposit of between 10 and 30%. It sets a date for the signing of the final contract in the presence of a notary. The notary will check the property title for undisclosed charges and ensure that the vendor has the right to sell.
Final contract
The final contract officially transfers the title of the property from the vendor to the buyer, and is signed by both parties before the notary. The notary then logs the change of title at the property registry.