Interest relief on mortgage in 2020 – who is entitled and how to calculate it?

From January to the end of April there is a period in Poland for tax settlements PIT and CIT. Therefore, millions of Poles settle the tax with respect to personal income tax or corporate income tax.

They can take advantage of numerous tax optimization concessions. If they have a mortgage, they can take advantage of the interest relief once they meet the additional requirements. What is How to use it in your annual tax return?

What is the interest relief?


The catalog of tax breaks lists the tax breaks and preferences that the taxpayer can use for settlements with the tax office due to income tax. One of them is interest relief. What is this? This is a tax relief used for settlements of individuals due to annual income tax.

It gives the taxpayer entitled to such relief the deduction of interest on the granted housing or mortgage loan. This is an interest relief for people who pay off a mortgage and incur costs of interest that are the subject of a tax deduction from income or income obtained in a given tax year.

The taxpayer deducts only interest paid, not interest payable and unpaid. In addition, the deduction is limited to a certain amount.

Refinancing loan and interest relief

The interest relief is applicable to housing mortgages taken from a bank or from a cooperative savings and credit union.

Not only interest on the original loan, but also interest in refinancing loans will be deductible.

Interest relief – regulating act

The interest relief is deducted by Polish tax residents on the basis of art. 26b of the Act of July 26, 1991, on personal income tax. Therefore, for the interest relief, the legal basis is the PIT Act, but in the version binding until the end of 2006.

In the current Act on personal income tax, you can look for regulations on interest relief in vain. It is worth emphasizing that taxpayers are entitled to interest relief on the basis of rights acquired no longer than until 2027.

Terms and conditions for counting down the statutory discount


Some taxpayers who have taken out a home loan have the right to have their income or income from taxed sources reduced by the cost of interest under the interest relief. The rules for deducting such relief have been mentioned in an earlier tax act. The interest relief is granted to the taxpayer under the following conditions:

  • he must be subject to unlimited tax liability in Poland;
  • the loan or loan was granted between January 1, 2002, and December 31, 2006, by a bank or cooperative savings bank (SKO);
  • in the case of an investment relating to a building or a dwelling, the relief shall apply if the construction was completed not earlier than in 2002;
  • in the case of construction, superstructure or extension of a building for residential purposes, the relief will be due if the investment was completed before the expiry of three years from the end of the calendar year in which, in accordance with the construction law, the investor obtained the building permit or the permit for the use specified in the provisions of the construction law apartment building;
  • in the case of a contribution to a housing cooperative or the purchase of a newly built residential building or a dwelling – the discount will apply if a contract has been concluded to establish cooperative ownership or tenant’s right to a dwelling or a contract in the form of a notarial deed to establish separate ownership of the dwelling, to transfer on the taxpayer of the ownership of a residential building or dwelling, one of which will be the taxpayer entitled to the discount;
  • interest has already been paid, and the amount and date of payment have been documented in an appropriate manner – proof issued by the lender;
  • interest cannot be included in tax costs (tax-deductible costs) or reimbursed to the taxpayer in any other form unless the interest refunded has increased the tax base;
  • the taxpayer or the spouse of the taxpayer could not benefit from the income (income) or tax deduction of expenses incurred for their own housing purposes.

The condition for taking advantage of the interest relief in PIT is taking a loan by a taxpayer to meet his own housing needs. However, this taxpayer did not have to be registered in the acquired property nor did he have to live in it, but at the time of taking the loan, he should intend to live in the premises purchased for the loan.

Interestingly, the sale of the property, the purchase of which was financed with a bank loan, does not result in the loss of the right to take advantage of the relief in the following years, but the basic condition here is further repayment of the loan.

Many taxpayers are wondering not only whether they are entitled to an interest relief, but also what PIT should be submitted to the tax office in the case of this relief. Well, the deduction of the amount of interest relief is made in the annual tax returns submitted by taxpayers: PIT-37, PIT-36 or in PIT-28 and in Annex PIT / D.

What interest cannot be deducted?

What interest cannot be deducted?

It is not possible to deduct credit interest under the taxpayer’s personal tax relief if:

  • we’re not actually paid,
  • the amount and date of payment of interest are not documented by proof issued by the entity granting the loan,
  • were included in tax-deductible costs,
  • have been returned to the taxpayer in any form,
  • were deducted from revenues under the Lump-sum Act.

In addition, it is not possible to deduct, as part of the interest relief, interest on loans:

  • granted from the National Housing Fund,
  • granted by housing associations,
  • granted to remove the effects of floods,
  • covered by interest redemption from state budget funds,
  • used for the purchase of land or perpetual usufruct right to land,
  • contracted under the terms of the Act of September 8, 2006, on financial support for families in purchasing their own apartment.
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