Selling real estate as part of a business requires the right accounting approach, which depends on how the property is classified. The key question is whether the property is a fixed asset or goods for resale. This classification determines how the transaction is recorded in the tax ledgers, the revenue records and the VAT settlement. The criteria for treating an asset as a fixed asset are collected in our guide on how to tell a fixed asset from equipment.
Business owners running various forms of business need to know the rules for booking a sale of real estate in order to avoid errors that may lead to sanctions from the tax authorities. Getting this right requires knowledge of tax law and of the practical side of keeping accounting records.
Classifying real estate in a business
The basic step when booking a sale of real estate is to classify it correctly under tax law. How the transaction is recorded in the books depends directly on whether the property has been classified as a fixed asset or as goods for resale.
Under Article 22a(1) of the PIT Act, depreciable fixed assets are assets owned or co-owned by the taxpayer, purchased or produced in-house, complete and fit for use on the day they are put into use, with an expected useful life of more than one year
Fixed assets include structures, buildings and premises constituting separate property, machinery, equipment and means of transport, as well as other items used by the taxpayer for the purposes of their business or made available for use under a lease, tenancy or leasing agreement.
Goods for resale have a different definition, found in the regulation on keeping the tax revenue and expense ledger. Goods for resale are products intended for sale in an unprocessed state, as well as by-products obtained in special branches of agricultural production.
Real estate used as the company's seat or intended for rental is classified as a fixed asset. However, if the taxpayer's business includes trading in real estate, such assets are goods for resale intended for further sale
The practical distinction between a fixed asset and goods for resale is fundamental to how the transaction is booked. A business engaged in property development or real estate trading will treat buildings and premises as goods for resale. By contrast, a service company that uses a property for its business will classify it as a fixed asset.
The classification of real estate also affects whether depreciation write-offs can be made and how maintenance and operating costs are settled. Fixed assets are depreciated systematically over their useful life (except, among others, land and residential buildings and premises – Article 22c of the PIT Act), while goods for resale are settled at the time of sale.
Sale of real estate in the KPiR
Booking the sale of real estate in the KPiR (tax revenue and expense ledger) requires the transaction to be entered in the right column, which depends on whether the property is classified as a fixed asset or as goods for resale. Which warehouse documents can serve as the basis for an entry is discussed using the example of the WZ note in the KPiR.
According to the KPiR explanatory notes applicable from 1 January 2026 (regulation of 6 September 2025, Journal of Laws (Dz.U.) 2025 item 1299), column 9 Value of goods and services sold is used to enter revenue from the sale of goods and services. Column 10 other revenue is used to enter other revenue, including revenue from the sale of business assets, contractual penalties received or remuneration of a tax remitter. In the ledger kept until the end of 2025, these were columns 7 and 8.
The sale of real estate that is a fixed asset should be entered in column 10 of the KPiR as other revenue (except residential real estate – its sale is not business revenue, Article 14(2c) of the PIT Act). If the property is classified as goods for resale, its sale should be entered in column 9 of the KPiR as revenue from the sale of goods
A mandatory element of the entry is the date on which the revenue arose. This is governed by Article 14(1c) of the PIT Act, which provides that the date on which revenue from non-agricultural business activity arises is the day the item is delivered, the property right is sold or the service is performed, but no later than the day the invoice is issued or the payment is settled.
These rules can be illustrated by the example of a business owner who buys and sells real estate and has sold commercial premises. The sale agreement was concluded as a notarial deed on 30 June, the invoice was issued on 2 July, and the full price was received on 2 August.
- Determining the date the revenue arose on the basis of the earliest event
- Identifying the date of the notarial deed as decisive
- Entering the revenue under the date of 30 June in the appropriate column
- Classifying the property as goods for resale because of the business profile
- Entering the revenue in column 9 of the KPiR
Revenue arises at the earliest of the following events: delivery of the item, issue of the invoice or settlement of the payment. When real estate is sold by notarial deed, the date the revenue arises will usually be the day the deed is signed
Determining the date the revenue arose correctly is crucial for settling income tax properly and meeting tax obligations on time. Incorrect dating can lead to irregularities in tax settlements and potential sanctions.
Revenue records under the flat-rate tax on recorded revenue
Taxpayers who have chosen the flat-rate tax on recorded revenue (ryczałt) as their form of business taxation must keep revenue records. When real estate is sold, they must enter the date the revenue arose and apply the correct tax rate.
The flat-rate tax rates are set out in Article 12(1) of the Act on flat-rate income tax on certain revenue earned by individuals. For the business of buying and selling real estate on one's own account, the rate is 10 percent of revenue.
The flat-rate tax on recorded revenue is 10% of revenue from services of buying and selling real estate on one's own account under PKWiU classification 68.10.1. This rate applies regardless of the value of the transaction
Special rules apply to the sale of property rights or real estate that are fixed assets or intangible assets. Under Article 12(10) of the Act, when such assets are sold, regardless of when they were acquired, the flat-rate tax is 10 percent of the revenue earned.
This provision also covers situations where the assets were withdrawn from non-agricultural business activity and fewer than 6 years have passed between the first day of the month following the month of withdrawal and the date of sale. This does not apply to residential buildings and premises used in the business – if they are sold before 5 years have passed from the end of the year of acquisition or construction, Article 30e of the PIT Act applies (Article 12(10a) of the flat-rate tax Act).
| Type of real estate | Flat-rate tax rate | Revenue records column | Legal basis |
|---|---|---|---|
| Goods for resale | 10% | Column 12 | Article 12(1) point 3 |
| Fixed asset | 10% | Column 12 | Article 12(10) |
| Withdrawn fixed asset | 10% | Column 12 | Article 12(10) |
Under the flat-rate tax on recorded revenue, regardless of whether the property is a fixed asset or goods for resale, the sale value should be entered in column 12 of the revenue records (template applicable from 1 January 2026, Journal of Laws (Dz.U.) 2025 item 1294; previously column 10), which is used to record revenue taxed at the 10% rate
Keeping revenue records under the flat-rate tax is much simpler than keeping the KPiR, because you only need to record the date the revenue arose and its amount in the appropriate column. There is no obligation to record tax-deductible costs, which simplifies the bookkeeping.
A business owner on the flat-rate tax who buys and sells real estate on their own account (PKWiU 68.10.1) sold a flat for PLN 500,000. Regardless of the purchase price and other expenses incurred on the flat, the flat-rate tax will be PLN 50,000 (10% of revenue). The full revenue will be entered in column 12 of the revenue records.
VAT on the sale of real estate
The sale of real estate is subject to special VAT rules, which in many cases provide for an exemption. The VAT Act sets out precise conditions that determine whether the exemption applies or tax must be paid.
Under Article 43(1) point 10 of the VAT Act, the supply of buildings, structures or parts thereof is exempt from tax, except where the supply is made as part of the first occupation or before it, or where less than 2 years have passed between the first occupation and the supply of the building, structure or part thereof. A supply not covered by this exemption may be exempt under Article 43(1) point 10a – where the seller had no right to deduct VAT on acquisition, and improvement expenses with the right to deduction did not exceed 30% of the initial value. The parties may also waive the exemption under point 10 and opt for taxation (Article 43(10)). If a VAT-exempt sale takes place within the 10-year adjustment period, a seller who deducted VAT on acquiring the property adjusts the deducted tax in one go for the remaining adjustment period (Article 91(2), (4) and (5) of the VAT Act).
The sale of built-up real estate is in many cases exempt from VAT. The exemption under Article 43(1) point 10 does not apply at first occupation or where less than 2 years have passed since the first occupation
The obligation to keep VAT records is governed by Article 109(3) of the VAT Act. Taxpayers, except those performing only activities exempt from tax under Article 43(1) and those exempt on the basis of turnover (Article 113(1) and (9)), must keep records containing data that allow the tax to be settled correctly and the recapitulative statement to be prepared. Since 2020, the records have been submitted in the JPK_V7 file (VAT return with records, SAF-T file).
VAT records must include the following elements:
- Type of sale and taxable amount
- Amount of output tax, including output tax adjustments
- Breakdown by tax rate
- Amounts of input tax reducing output tax
- Counterparty details
- Sales and purchase documents
The only taxpayers exempt from keeping VAT records are those performing only activities exempt from tax under Article 43(1) and those exempt on the basis of turnover. If a VAT-exempt sale of real estate is one of many activities, the sale value must be entered in the VAT records
Under the regulation on the detailed scope of data in tax returns and VAT records, the records must include the taxable amount from the supply of goods and services in Poland that are exempt from tax.
In practice, these rules mean that most business owners will have to enter the sale of real estate in their VAT records, even if the transaction is VAT-exempt. The exception is entities performing only exempt activities and taxpayers exempt on the basis of turnover.
Documenting the sale of real estate
Properly documenting the sale of real estate is a key element of the entire accounting process. The documentation must be complete, compliant with the law and allow all aspects of the transaction to be clearly identified.
The basic document confirming the sale of real estate is the notarial deed, which under the Civil Code is required for the sale agreement to be valid. This document is the basis for recording the transaction in the books and for determining the date the revenue arose.
In addition, in a business, an invoice documenting the transaction must as a rule be issued – for a taxable sale to another taxpayer (Article 106b(1) point 1 of the VAT Act). For a sale exempt from VAT under Article 43(1), an invoice is mandatory only at the buyer's request (Article 106b(2) and (3)). The invoice must contain all the elements required by the VAT Act, including information on the exemption or tax rate applied.
Documents relating to the sale of real estate must be kept until the tax liability becomes time-barred, which as a rule means 5 years from the end of the calendar year in which the tax payment deadline passed (Article 86 § 1 and Article 70 § 1 of the Tax Ordinance Act (Ordynacja podatkowa), Article 112 of the VAT Act). This applies to notarial deeds, VAT invoices and other documents confirming revenue and costs
Another important part of the documentation is evidence of payments and financial settlements. The business owner must keep documents confirming receipt of the sale proceeds, such as bank statements, cash payment receipts or other forms of settlement.
For real estate that is a fixed asset, it is also necessary to keep a fixed asset register, which makes it possible to track the initial value, depreciation write-offs and net value at the time of sale.
Tax aspects of selling residential real estate
The sale of residential real estate classified as fixed assets is subject to separate tax rules, which differ from those applicable to the sale of commercial real estate or goods for resale.
Under Article 14(2c) and Article 10(3) of the PIT Act, revenue from the sale of a residential building, a residential unit constituting separate property (together with the land) or a cooperative ownership right to a residential unit used in the business is not business revenue. It is settled like a sale of real estate outside the business: 19% tax on income (Article 30e) is payable only if the sale took place before 5 years had passed from the end of the calendar year in which the property was acquired or built.
The sale of residential real estate that is a fixed asset in a business is subject to different tax rules than the sale of commercial real estate. You need to check the conditions of the exemption and properly document how the property was used
The type of property and the date of its acquisition are key. A residential unit used in the business (for example rented out by the business) and sold after 5 years from the end of the year of acquisition is not subject to income tax. By contrast, the sale of commercial premises or other non-residential real estate that is a fixed asset is business revenue (Article 14(2) point 1 of the PIT Act), also where it was withdrawn from the business before the sale and fewer than 6 years have passed since the withdrawal (Article 10(2) point 3). The rules on residential real estate do not cover flats that are goods for resale – their sale is business revenue.
Business owners must also consider how the sale of residential real estate affects their VAT settlements. In many cases the sale of residential real estate is exempt from VAT, but this must be properly documented in the tax records.
Corrections and errors in booking the sale of real estate
Errors in booking the sale of real estate can have serious tax consequences, so you need to know the rules for correcting irregularities and what to do when errors are discovered.
The most common errors concern the incorrect classification of real estate as a fixed asset or goods for resale, which leads to revenue being entered in the wrong KPiR column. Other typical problems are an incorrect date of revenue or incorrect application of tax rates. For clients of our accounting office, we enter revenue from the sale of business assets in the KPiR and the VAT records.
When an error is discovered, the business owner must correct the books and, if necessary, correct the tax returns filed. The correction should be made promptly after the error is discovered, and its scope must cover all effects on the tax settlements.
Errors in booking the sale of real estate should be corrected promptly after they are discovered. It may be necessary to file corrected tax returns and pay any tax arrears together with interest
The error correction procedure involves the following steps:
- Identifying and analysing the error in the books
- Determining the impact of the error on the tax settlements
- Correcting the books
- Preparing and filing corrected tax returns
- Paying any tax arrears
- Documenting the entire correction process
Pay particular attention to the deadlines for correcting errors. As a rule, a tax return can be corrected until the tax liability becomes time-barred (Article 81 of the Tax Ordinance Act), but during tax proceedings or a tax audit the right to correct is suspended to the extent they cover (Article 81b § 1). Delaying a correction also increases default interest and the risk of sanctions.
