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Frankowicze, individuals with Swiss franc-denominated mortgages in Poland, need not worry about income tax, according to the latest report in “Rzeczpospolita.” Whether agreeing to a settlement with their banks or pursuing legal action, the tax provisions are reportedly in their favor.
Tax-Free Debt Cancellation
Debts settled through agreements with banks are reportedly tax-exempt, including the principal loan amount and interest. This exemption is applicable for the current and upcoming tax years, as per the finance minister’s regulation set to extend into 2024. Critics claiming the end of this tax relief argue without basis, according to tax advisor Mikołaj Duda.
Frankowicze opting for settlements in December or January will not incur personal income tax (PIT), as confirmed by tax advisor Piotr Juszczyk. While the canceled loan amount is typically considered the borrower’s income, banks can waive this obligation if the borrower meets specific criteria outlined by the finance minister’s regulation.
Conditions for Tax Relief
To qualify for tax relief, the mortgage must have been granted before January 15, 2015, secured by a mortgage, and used for a single housing investment. This includes traditional Swiss franc-denominated loans, as clarified by Juszczyk. Changes in the property securing the loan do not disqualify borrowers from tax preferences.
While tax authorities express a positive stance, Juszczyk advises borrowers to verify if they meet all relief conditions. Failure to comply, such as using part of the loan for non-housing purposes, may necessitate taxation.