A financial donation from parents for the purchase of an apartment is a common form of financial support when acquiring the first property. Individuals wishing to help their children buy an apartment often wonder whether a donation from parents is taxed, how to properly document it, and how much time they have. Here, we explain what you need to know about a monetary donation for a child for housing purposes.
Although all donations and inheritances are subject to taxation, there are certain exemptions in specific cases. In the context of inheritance and donation taxes, there are three tax groups, each covered by specific exemptions under certain conditions.
The division into tax groups in Poland is a key element of the tax system, determining different tax-free amounts based on the degree of kinship between the donor and the recipient. Understanding this division is crucial for both those planning donations and those receiving them. Below, we present a detailed division into tax groups and the applicable tax-free amounts, which may affect tax obligations.
Group I includes spouses, descendants (e.g., son, daughter, grandchildren, great-grandchildren), ascendants (e.g., mother, father, grandparents), stepchildren, sons-in-law, daughters-in-law, siblings, stepparents, and parents-in-law. The tax-free amount for Group I is currently 36,120 PLN (from July 1, 2023).
Group II includes descendants of siblings, siblings of parents, descendants and spouses of stepchildren, spouses of siblings and siblings of spouses, spouses of siblings of spouses, and spouses of other descendants. The tax-free amount is 27,090 PLN (from July 1, 2023).
Group III includes other acquirers with a tax-free amount of 5,733 PLN (from July 1, 2023).
Additionally, within Group I, there is the so-called Group 0, which includes immediate family members: spouses, descendants (e.g., son, daughter, grandchildren, great-grandchildren), ascendants (e.g., mother, father, grandparents), siblings, stepparents, and stepchildren.
According to the Act of July 28, 1983, on inheritance and donation taxes, donations between parent and child or child and parent are subject to an exemption.
According to the regulations, a monetary donation for a child up to 36,120 PLN is completely tax-free and does not need to be reported anywhere. However, if the donation from the mother or father exceeds this limit within five years, the recipient has six months to submit a declaration of receiving the donation to avoid paying the tax.
This is done using the SD-Z2 form. Remembering this will allow you to retain the right to the tax exemption and avoid penalties for non-compliance.
If parents want to finance a larger portion of the property or the entire apartment, the value of the donation will be significantly higher. What then?
A donation for housing purposes exceeding the tax-free amount of 36,120 PLN requires additional steps. The receipt of the donation from parents must be documented, and the recipient (child) must report this to the Tax Office within six months of receiving the donation.
The same rule applies to donations of both monetary funds and material assets, such as an apartment. If the recipient forgets to report the donation on time, they will be taxed according to general rules.
A donation for housing purposes is a significant help for children entering adult life. It allows for quickly obtaining funds to purchase a property. However, if the donation for the son or daughter is higher — for example, if parents want to pay for the entire property—it is worth considering transferring the donation in the form of a ready-made property.
The simplest way to show support is to buy an apartment from the parents and then transfer it to the children as a donation. Such an agreement must be concluded in the form of a notarial deed. Such a donation is not subject to donation tax because the donors and recipients belong to tax group 0. However, as with a monetary donation, this must be reported to the tax office. This way, parents can help their children obtain their own apartment while benefiting from favorable tax regulations.
The article presents selected legal aspects related to the transfer of donations and possible forms of support for the purchase of real estate. This material does not constitute binding legal advice. WPBM Mój Dom S.A. recommends consulting a qualified legal advisor for individual advice, due to the complexity of the regulations and the specificity of individual cases.
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