Investing in real estate has almost always outperformed deposits or other banking products.
Now that banks have significantly reduced interest rates, this is even more attractive. An additional argument in favor of investing in an aparthotel is the possibility of refunding the VAT paid in the price of the premises.
So when does a rental apartment become a profitable investment?
Developers estimate that at least 30% of apartments purchased are investment purchases. This is due to, among others, from the possibility of deducting VAT, which for commercial premises is 23%, while residential premises are taxed at the basic VAT rate of 8%.
VAT, i.e. tax on goods and services, applies to both sellers and buyers. Taking into account the fact that practically everyone who is an active VAT payer can receive a tax refund, the attractiveness of investing in aparthotels increases significantly. It is therefore worth familiarizing yourself with the tax nuances before purchasing a non-residential premises.
Who can deduct VAT?
Investing in an aparthotel involves purchasing commercial real estate. Therefore, it is not a residential premises used by the property owner, but an apartment intended for short-term rental. The purchase of such premises allows natural persons to deduct VAT. This also applies to persons not conducting business activity – pursuant to Art. 86 section 1 of the Act of 11 March 2004 on tax on goods and services.
It is worth remembering that VAT refund is possible if the buyer of the apartment did not perform taxable activities (e.g. sales) in the settlement period.
How to deduct VAT from the purchase of an aparthotel?
The tax refund procedure is not complicated, but several conditions must be met before signing the contract with the developer. Let’s look at two situations.
The case when the buyer does not run a business:
The above-mentioned Act allows for a situation in which the purchaser of an apartment who is a natural person registers as a VAT payer (by submitting the VAT-R form to the appropriate tax office). However, please remember that these activities should be performed before the advance payment is made.
The condition for deducting VAT is to use the premises exclusively for rent. The lease is settled on the basis of a VAT invoice issued by a natural person.
To receive a tax refund, after purchasing the property, you must submit a VAT-7 declaration and a uniform JPK-VAT control file to the tax office. The tax declaration allows you to transfer the tax surplus to subsequent settlement periods or apply for a refund of the surplus within 60 or 180 days of submitting the declaration.
VAT refund for people running a business:
Persons running a business and being a VAT payer deduct tax on the same principles as in the case of other expenses. However, if the entrepreneur is not a VAT payer, it is necessary to register as an active VAT payer. This involves submitting the VAT-R form.
If the entrepreneur used the subjective VAT exemption, after registering as an active VAT payer, he will have to add VAT to his current activities. However, entrepreneurs who, before submitting the declaration, provided VAT-exempt services (objective exemption) will have to determine the proportion of VAT in relation to the tax deduction for general costs.
How much can you save by purchasing a property in an aparthotel?
In the case of a premises worth PLN 1 million gross, VAT amounts to nearly PLN 187,000. zloty . This means that after purchasing the property, quite a large amount is returned to the buyer’s account. We know from experience that buyers of the above-mentioned premises spend the money they save for further investments or, for example, to buy a car. This clearly shows how significant these amounts are and how the profitability of such an investment increases.
Investing in apartments for rent brings many benefits, commercial premises still generate profits higher than inflation. As a rule, the purchased property can be rented for commercial purposes, e.g. as a long or short hotel stay, but not for residential purposes. However, this does not exclude long-term rental – in such a situation it is necessary to add VAT to a given service and construct the rental agreement appropriately.
Summary
- The investor purchases a commercial property, not a residential premises, which allows him to deduct VAT because the apartment is intended for short-term rental.
- VAT refund is possible for both companies and individuals.
- Many developers offer net prices for apartments – especially for people who can obtain a full VAT refund.
- Deducting VAT after purchasing premises in an aparthotel does not exclude long-term rental.
Are you considering investing in an aparthotel? Do you want to know more about the possibility of obtaining a VAT refund?
Contact us – we will be happy to answer all your questions and dispel your doubts!
