Latest individual interpretations of the National Tax Information System (KIS) confirm a favourable position for entrepreneurs: it is possible to count as a Costs of Obtaining Income (COP) part of the interest on private mortgage, commensurate with the extent to which the property is used for business purposes.
In other words, if, for example, 30% of the area of your house or flat is used for business purposes (home office, office), then 30% of the paid mortgage interest for the purchase of this property can reduce your tax. Importantly, such deduction of interest on a loan is possible even if the property has not been entered in the company's fixed asset register - The key here is the actual business use of part of the premises.
Interest on a BUI loan: what do the latest KIS interpretations (2024/2025) say?
Tax authorities have consistently confirmed this position in a number of individual interpretations issued in 2024 and 2025, drawing a clear line for businesses accounting for housing costs in operations.
Proportionate accounting for company property costs
A key principle highlighted by National Fiscal Information (KIS), is proportionate accounting for expenses. If only part of the property is used for business purposes, only that part of the costs can go to the BUI.
- Interpretation by the Director of the KIS of 24 January 2024 (0115-KDIT3.4011.777.2023.3.KP): It concerned a tax adviser using 30% of flat space for an office. The authority confirmed that both utilities and rent could be included in the BUI in this proportion, as well as the mortgage interest: „In this proportion, the interest on the loan should also be accounted for in the costs.”
- Interpretation by the Director of the KIS of 23 October 2024 (0112-KDIL2-2.4011.652.2024.1.KP): It was explicitly stated that the interest on the loan „in proportion to the proportion of the space used for business - may constitute a deductible costs this activity”.
- Interpretation by the Director of the KIS of 22 January 2025 (0113-KDIPT2-1.4011.814.2024.1.AP): The latest interpretation extends the interpretation to common parts. It emphasised that to deductible costs the part of the interest corresponding to the area of strictly used for activities, as well as the relevant part of the common area (e.g. corridor, toilet) shared within the house.
It is worth noting that in these interpretations the authorities did not impose an obligation to include the entire property as a fixed asset - What counts is the actual business use of part of the house/apartment.
When is private interest deductible as a BUI? Conditions for deduction
In order to be able to safely count part of the mortgage interest as a tax deductible costs (tax deductible expenses), the entrepreneur must meet the standard conditions under the PIT Act.
1. link to revenue and actual payment
The basis is the demonstration of a causal link between the incurred interest on the loan and business income (which, in the case of a home office, was deemed to be met). In addition, the PIT Act excludes from costs, inter alia, repayment of loan principal and interest that have not actually been paid.
The following can therefore be included in the BUI interest paid only on a loan - accrued but unpaid interest is not a Cost of Income.
Important for entrepreneurs: In the context of business costs, it is worth bearing in mind other tax aspects. Interested in how to account for VAT in e-commerce? Find out more: https://bktkancelaria.pl/artykul-o-vat/.
How to properly document the mortgage interest deduction?
The tax authorities stress the obligation to duly document and justify such interest deductions on loans on the part of the taxpayer. The quoted interpretations explicitly state that these expenses may constitute a tax cost provided that they are properly documented.
Documentation requirements for PSCs
The taxpayer must demonstrate, during a possible audit, the causal link between the incurred interest and the company and reliably document the proportion in which the property serves the business (see KIS Interpretation of 16 May 2024).
In practice, this means having to have:
- Evidence of interest payments: E.g. bank statements or a certificate from the bank on the amount of interest paid during the period concerned.
- A documented calculation of the proportion: A statement by the entrepreneur specifying the metre (or percentage of the area) used for the business. A statement together with, for example, a floor plan of the house and an indication of the part used for the business is sufficient.
It is a good idea to draw up for your own records a description of which rooms or what part of the house the company serves (possibly how the proportion of common areas was calculated), so that you can fully justify this. See also: Gift cards as a tax expense - when do you include them as a tax deductible expense?.
Remember property tax and liability
Let us also not forget that partial use of the property in order to carry out business activities entails additional tax liability. We should report this fact to the municipality. Because we will pay a higher price on the part used for business. property tax.
Summary, if a certain percentage of the property's surface area is used for business, then exactly that percentage interest on a private mortgage for its purchase can be recognised as a deductible expense. The condition is that this interest is actually incurred and paid and that the proportionate use of the property for business purposes is properly documented.
If you would like to discuss how to recognise interest expenses on a loan for the purchase of real estate in the BUI or if you have other legal and tax doubts, please contact our specialist or take advantage of an online legal consultation: https://bktkancelaria.pl/porady-prawne-online-2/.
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