Supreme Administrative Court rules on residential property depreciation

The Supreme Administrative Court (NSA) has issued a ruling regarding the depreciation of residential properties, potentially offering tax relief for owners who purchased apartments before the ‘Polski Ład’ reforms. The court overturned a previous interpretation and a lower court ruling, citing the protection of acquired rights and interests in progress under the Constitution. This decision addresses a dispute where entrepreneurs sought to continue depreciating residential units held in their business records prior to the 2023 ban on residential depreciation.

Under current regulations introduced by ‘Polski Ład’, depreciation for residential buildings, separate residential units, and cooperative ownership rights is excluded from income tax costs. While a transitional provision allowed for depreciation on properties acquired before January 1, 2022, until the end of 2022, the ban has since been strictly applied.

In response to parliamentary inquiries regarding these ‘curious solutions’, the Ministry of Finance clarified that current PIT and CIT laws explicitly exclude residential buildings and related rights from depreciation for income tax purposes. The Ministry noted that the exclusion of these costs has been in effect since early 2022, following the expiration of the transitional period.