Buy to Let Mortgage for Foreigners Living in Poland

Can a Foreigner Rent Out a Mortgaged Apartment?

Yes, foreigners can rent out an apartment purchased with a buy to let mortgage in Poland. Banks do not prohibit renting out properties financed with a mortgage. However, it is advisable to ensure that the loan agreement does not contain any restrictions on rental activities.

Buy to Let Mortgage for Foreigners in Poland – Basic Requirements

1. Residency Status – Banks prefer applicants with a permanent residence permit or a certificate of registration of an EU citizen’s stay in Poland. Individuals with a temporary residence permit can obtain a buy to let mortgage, but the availability of such an offer is limited to fewer banks and depends on the validity period of the residence card.
2. Income and Creditworthiness – Banks consider income earned in Poland, preferably under an indefinite-term employment contract. Individuals earning income abroad may face additional requirements and limitations. Future rental income from the property cannot be included when calculating creditworthiness.
3. Credit History – Having a credit history in Poland (e.g., an active bank account, credit card, installment purchases) can increase the chances of a positive loan decision.
4. Down Payment – The standard required down payment is at least 10-20% of the property’s value; however, some banks may require a higher down payment (e.g. 30% or 40%) if the borrower already owns other properties purchased with a buy to let mortgage.
5. Ministry of Internal Affairs and Administration Approval – A non-EU foreigner may need a permit to purchase real estate in Poland in specific cases.
   Location and Investment Profitability
   As with investments made by Polish citizens, the location of the apartment is a key success factor. Warsaw, Kraków, Wrocław, and Gdańsk are cities with high rental demand. Proximity to universities, business centers, and public transport increases the attractiveness of the property.

It is also important to estimate the costs of maintaining the apartment, including rent, taxes, and the renovation fund. Modern buildings with low energy demand may be more cost-effective in the long run due to lower heating bills and the lack of future thermomodernization costs.

Taxes on Buy to Let Rental Income for Foreigners

Since 2023, rental income can only be taxed under the lump-sum taxation method:

• 8.5% for income up to PLN 100,000 per year,
• 12.5% for the portion exceeding PLN 100,000 per year.

Foreigners are required to settle taxes with the Polish tax office if they rent properties in the country. It is also necessary to check whether a double taxation avoidance agreement between Poland and the investor’s tax residence country requires additional tax settlements.

Is Buying an Apartment with a Buy to Let Mortgage in Poland Worth It?

Purchasing a buy to let apartment can be a good investment for foreigners if they meet bank requirements and choose the right location. It is advisable to seek assistance from a mortgage advisor who can help find a bank offering a buy to let mortgage for foreigners on the best terms. However, it is important to consider risks such as interest rate changes, taxation, and potential difficulties in finding tenants.

To sum up, real estate investment in Poland can be profitable for foreigners, but it requires careful preparation and analysis. Understanding banking procedures, costs, and tax regulations will help avoid issues and maximize rental income.