Nowadays, more and more people who are not in formal relations decide to jointly invest in renovation, for example by borrowing. There is a problem of transmission and security of funds in case of a breakdown of the relationship or an argument between roommates.
Assuming tenant whether people living in an informal relationship decide to renovate the apartment and to do so one of persons taking a loan, in view of current legal regulations, the dispute between tenants whether the breakdown of the informal relationship can have adverse legal and tax effects.
first the problem is the issue of money ownership and settlement and reimbursement, which, in a conflict situation, may lead to an increase in the groundless enrichment alleged in the Civil Code (Article 405 – Article 414), and in the event of an escalation of the conflict even the charge of extortion qualified as a crime according to Article 286 Penal Code.
The issue of the informal transfer of money itself is also problematic and may raise interest from tax administrations. How do you protect your money and protect yourself from the tax?
The collection of other people's money in a bill of account for renovation should be linked to the conclusion of a donation agreement.
The essence of the donation agreement Article 888 Civil Code: “By a donation agreement, the donor undertakes to provide free benefits to the gifted at the expense of his property.” The consequence of the donation agreement is a tax obligation, where the tax group's inheritance tax and donations act plays a key role in determining the rates.
In the absence of family correlations (Tax Group III) tax will be subject to an amount exceeding the value 4,902 PLN and the tax rate may be from 10 to 20% the value of the donation.
In addition, the agreement does not provide in any way the protection of the capital transferred, nor does it allow recovery or requires recovery of the capital. It should therefore be considered that this is not an appropriate safeguard tool in the event of a conflict between non-members.
In view of the above, in order to ensure that the funds invested for the renovation of the apartment can be recovered, the following options should be considered:
- • the conclusion of a loan agreement;
- • the conclusion of an incorrect deposit agreement.
Both of these legal forms are provided for by the Civil Code provisions and provide cash security. A common feature of both agreements is the need to tax a civil law tax of 0.5% subject matter of the agreement.
At this stage, it should be noted that this is a more tax-friendly solution than the conclusion of a donation agreement, and the protective aspect of both the loan and the incorrect deposit should also be stressed.
The loan agreement does not require a specific objective for which it is to be given or a specific date of return, but allows for a condition for repayment (e.g. breakdown of the informal/removal relationship) tenant.
The essence of the incorrect deposit is the transfer of money or other things to the so-called storer, who has the right to dispose of them until the fixed refund date. Despite the similar consequences of the loan agreement, an incorrect deposit is made in the interest of the depositor and the tax liability rests with the keeper (e.g.
tenant, partner).
The loan agreements and the incorrect deposit form a simple form to ensure the easy execution of the cash-back obligation, and given that there are currently a large number of recurring loans/deposits on the market, they should not raise interest in the tax.
In the current state of the law, until the legislator decides to amend the provisions allowing, inter alia, property union/distribution of assets to persons outside the formal unions (marriage), both the loan and the deposit may provide adequate security for investments for the purposes of renovation and breakdown of relationships. The conclusion of any of the above-mentioned agreements will definitely offset the possible lengthy and painful litigation to recover the money invested.