The allocation of funds from the sale of the apartment for the purchase of the building located in the family plots will not benefit from the PIT exemption.
Supreme Administrative Court in judgment of 8 May 2018, reference no. II FSK 1128/16, He ruled that the purchase of a recreational plot with the buildings placed on it did not meet the needs of housing. In this respect, the Court of First Instance divided the arguments of the Director of National Tax Information, who, in the interpretation given, found the taxpayer’s position to be incorrect.
There is no residence in the family garden
The applicant, presenting the facts, indicated that he inherited from his mother a place of separate ownership. Due to the difficult material situation, he was forced to sell the property before it expired 5 years from the end of the tax year in which he acquired ownership.
The funds obtained from the sale were used to pay off the receivables, including mortgage credit and to purchase, together with the spouse, the right to the plot located in the Family Land Garden, together with its buildings. He lived in a purchased summer house with his family.
The building was equipped with all technical devices, ensuring its annual use. The described building was the only property the taxpayer owned.
Therefore, the applicant took the view that the purchase of the above-mentioned real estate fulfils the conditions for spending income for its own housing purposes, in accordance with the exemption provided for in Article 21(1)(131) Personal Income Tax Act.
In addition, he argued that this was the only place of residence for him and his family to meet all their housing needs.
Garden Altana is not a building referred to in the PIT Act. In addition, the owner of the plot and its non-contributions is the State Treasury, not the taxpayer who merely leases it. The NSA also claimed for the tax authority that there is no residence in the area of family partition gardens.
The Minister of Finance disagreed with this position. He stated that, in the factual state presented, the taxpayer had only acquired the right to a plot located in the Family Land Garden, whose purpose was to meet the public's leisure and recreational needs, by enabling gardening to be carried out.
The Authority also claimed that under the Act on the training of family plots, the residence is prohibited and that the legislature only permits the construction of a land-based gazebo there.
He also pointed out that the list of expenditure deemed to be expenditure for housing purposes is closed and that the purchase by the taxable person cannot be regarded as a purchase of a residential building, a part of it or a participation in such a building, a dwelling which is a separate property or a participation in such a premises, as well as a purchase of land or a share in the land or a right of use of land or a share in such a right related to that building or premises (as appropriate to Article 21(25)(1) point a).
The achievement of the housing objective must not take any form
The taxpayer has challenged the interpretation to the Provincial Administrative Court. WSA in Bydgoszcz, in judgment of 19 January 2016 reference no. ISA/Bd 950/15, considers the action to be justified, indicating the purpose of the exemption introduced by the legislature. A cassation complaint was lodged by the Director of the Tax Chamber in Bydgoszcz.
Eventually, the case went before the Supreme Administrative Court, which, however, shared the argument of the tax authority. The NSA indicated that the achievement of the housing target cannot take any form.
In fact, the legislator has indicated in the provisions of the Act a list of expenditure which can be considered to be the achievement of this objective. Garden Altana is not a building referred to in the PIT Act. In addition, the owner of the plot and its non-contributions is the State Treasury, not the taxpayer who merely leases it.
The NSA also claimed for the tax authority that there is no residence in the area of family partition gardens. The sentence is final.
Author:
Marcin Kołkowicz
Tax advisor, tax consultant at Russell Bedford Poland Sp. z o.o., graduate of the Administration, Management and Marketing of the Catholic University of Lublin named after John Paul II. The subject of tax law deals with from 2012. He gained experience in Lublin and in Warsaw tax advisory offices. Author and co-author of many tax publications, in particular for Tax and Tax Portal TaxFin.pl. In his career, he dealt with both direct and indirect taxation issues, with particular emphasis on VAT.