In brief

• Transferring real estate to a creditor in exchange for debt forgiveness is to generate income for the debtor.
• That income would have to be reported in the annual tax return.
• The proposed change concerns the PIT Act and is not yet binding law.

What is changing

If an owner transfers real estate to a creditor and the creditor, in return, releases the owner from the debt, income arises on the debtor's side. It will have to be settled in the annual tax return (Oddałeś mieszkanie za długi? Będzie przychód i podatek – Rzeczpospolita). The change is to be introduced into the Act on Personal Income Tax, but the materials do not indicate who submitted this proposal or at what stage the legislative procedure is.

Who it affects

The change will cover individuals who hand over real estate to settle obligations. It is not about sales on the market, but about transferring property in exchange for release from a debt.

Why it matters

For the debtor, such a transaction may mean a tax liability even though no cash was received. People planning to hand over an apartment for debts should factor this potential tax obligation into their decision before signing the agreement.

What comes next

The change still requires enactment through an amendment to the PIT Act. At this stage it is not known when it will take effect or how exactly the income will be calculated.