Tax aspects of redevelopment in the real-estate industry

 

A lack of investment plots in prime locations means that developers are increasingly interested in purchasing developed properties such as old office buildings, commercial or industrial facilities either to demolish or modernise it.

 

Such redevelopment has recently become a trend, especially among residential developers, as demand for housing is high.

Our article is intended to draw attention to selected tax aspects of redevelopment.

The tax consequences depend on the purpose of the investment. Rental facilities are accounted for as fixed assets. In turn, investments for sale (especially residential premises) are accounted for as goods for sale. Polish tax law does not provide for specific provisions for the real-estate industry in this respect. Therefore, general regulations apply, which means that the practice of tax authorities (expressed, among others, in tax rulings) and court judgments are of great importance. Development investments involve significant capital, which also translates into high sensitivity to risk. As a result, developers often want to confirm the settlement method through tax rulings, especially in areas that have not yet been sufficiently worked out in practice. This also applies to redevelopment aspects.

 

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#MORE on BPCC website in article with commentary by Piotr Paśko and Rafał Kran >
https://bpcc.org.pl/tax-aspects-of-redevelopment-in-the-real-estate-industry/.