The son received the first floor as a gift, the daughter the ground floor, then they swapped. That’s how their troubles began
A model example of the absurdities to which the interpretation of the regulations on taxation of the sale of real estate acquired as a gift and inheritance within the immediate family, presented for years by the Supreme Administrative Court (NSA), is leading, is the example of siblings who exchanged apartments received from their parents. It results from reading tax regulations backwards and not from the beginning. And at the beginning it is always specified what is the subject of a given act.
Article 1 of the Personal Income Tax Act (hereinafter referred to as the PIT Act) states that only income is subject to this tax. And everyone should know that income is a permanent increase in property. Unfortunately, the judges of the Supreme Administrative Court do not read the regulations from the beginning.
For example, in art. 19 sec. 1 of this act it is written that the income from the sale of a flat, subject to income tax, is the price obtained less the costs of sale. And since the value acquired in inheritance or donation and taxed with this tax is not mentioned directly in art. 19 sec. 1, and the sale price is not higher than the value acquired in inheritance or donation, the NSA orders the lack of any income to be taxed with income tax, because that is literally what it concludes from reading art. 19 sec. 1 of the updof.
The only reason for this may be the failure to take into account Article 1 of the updpf, which, as indicated above, taxes only income. This leads to such absurdities as the one described below.
First floor for the son, ground floor for the daughter
The parents, in order to avoid any potential problems and disputes among the children (heirs) after their death, decided to divide the two-storey residential house they owned into two separate premises: the ground floor and the first floor. They gave the first floor to their son and the ground floor to their daughter.
