Real estate often represents the most significant part of a family’s wealth. Questions about how and under what conditions to transfer property into a family foundation raise many concerns. Fees, taxes, legal risks — each step requires careful planning.
This article explains the key issues related to real estate in a Polish family foundation (fundacja rodzinna).
Can a Family Foundation Own Real Estate?
Yes. A family foundation can own real property both in Poland and abroad.
The Family Foundation Act (2015) does not restrict the types of assets a foundation can hold. However, the ownership must align with the foundation’s purpose and the family’s genuine needs.
How to Transfer Property to a Foundation — Procedure
Property transfer follows standard real estate transaction rules:
- Must be executed in a notarial deed form
- Requires registration in the Land Registry (Księga Wieczysta)
- Should be published in the National Court Register (KRS)
- The foundation must have legal capacity (be registered).
Stamp Duty on Civil Law Acts (PCC)
Transferring real property to a foundation is subject to stamp duty (PCC) of 2% of the property’s value.
An exemption applies if the foundation was established by testament — in this case, the transfer is tax-free.
Otherwise, the stamp duty is mandatory and payable at the time the deed is executed.
Corporate Income Tax (CIT) and Property Income
If the foundation owns property for its own use (headquarters, family residence), the CIT exemption applies to the entire property.
If the property generates income (rental, lease), that income is taxable under general CIT rules (19% on net profits).
The foundation must maintain separate records of income and expenses related to real property.
Insurance — Foundation’s Obligation
As the property owner, the foundation should obtain comprehensive insurance covering the full value. Insurance costs are deductible business expenses for CIT purposes.
Risk: Mortgages and Debt
If the foundation takes out a mortgage, it faces the risk of losing the property if the debt is not repaid. Additionally, in case of foundation liquidation, creditors may pursue the property. It is worth considering whether mortgaging is the best option, or if the foundation should rely on other funding sources.
Annual Property Tax
Poland does not have a general wealth tax on real estate. However, annual property tax applies to unused land. Developed or used properties (houses, offices) are either minimally taxed or exempt. The foundation should verify proper tax classification with local authorities.
Sale or Lease of Property
Income from selling property is subject to CIT (unless the foundation qualifies for an exemption). Rental income is also taxable. The foundation must issue invoices and maintain proper tax records.
Summary
Real estate in a family foundation can be an effective long-term wealth management tool. However, transfers, taxation, and administration require careful planning. Each family should evaluate whether property should be owned by the foundation or remain in private hands.
We recommend consulting with a tax advisor or attorney specializing in family foundation law.
Michał Gawlak
attorney-at-law
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