Today we will focus on the topic of RENTAL. We asked tax advisors Ing. Marianna Zverková and JUDr. Ing. Viera Fraňová to summarize the basic important information on this topic for us.
Basic information you should know if you are renting out property:
A natural person who rents out property is required to declare rental income achieved in the previous calendar year by submitting a tax return by March 31.
Things not to forget:
- For rental income according to § 6 para. 3 of the Income Tax Act ("ITA"), lump sum expenses cannot be claimed.
- Rental income from properties includes not only "net rent" agreed as payment for the use of the property, but also income in the form of separately agreed payments for utilities or services paid by the tenant to the landlord or paid by the tenant directly to the energy or service provider if the contract for the supply of energy or services is concluded between the relevant supplier and the landlord.
- Income jointly earned by spouses from the rental of property included in the BSM (joint marital property) can be unevenly distributed by the spouses (by agreement), but income earned from the rental of property in joint ownership can only be divided among joint owners according to the size of their co-ownership shares (the law does not allow the income to be divided for tax purposes in any other way).
- Every individual taxpayer can use a tax exemption of €500 per calendar year for rental income under § 6 para. 3 of the ITA, but at the same time, they are required to reduce the documented expenses in the same proportion as the ratio of exempt income to total income.
- NEW: Documented expenses of a taxpayer who does not have rented property included in business assets include, in addition to electricity, heat, water, gas, and other services related to property rental, the fee paid to the housing fund for apartment building repairs (a change in the approach of the Financial Administration to the definition of expenses).
- Inclusion of rented property in business assets has its:
- Advantages, such as the ability for the lessor to claim a portion of the acquisition cost of the rented property in the form of so-called depreciation in tax deductions, or interest on mortgage or construction loans.
- Disadvantages, which may arise in the event of property sale, for example, when calculating the period for tax exemption; rental income from properties, along with other specified incomes, falls into a separate tax base subject to different tax rates:
- 19% on the part of the tax base not exceeding €38,553.01 (applies for 2022),
- 25% on the part of the tax base exceeding €38,553.01 (applies for 2022).
- Income for the lessor also includes non-monetary income in the form of technical evaluations of the rented property in the amount of expenses incurred by the tenant with the prior written consent of the lessor for the technical evaluation of the property beyond the obligations agreed in the lease, and unpaid by the tenant.
- Rental income from movable property rented together with real estate as its accessories (should be specified in the lease agreement), with the costs of purchasing these movable properties (such as freestanding furniture) being claimed by the lessor as documented expenses, thus reducing the tax owed.
- An individual taxpayer - lessor who claims documented expenses is not obliged to keep accounts but is required to keep tax records to the extent specified in § 6 para. 11 of the ITA (the law does not define the form of records, it only defines the content).
- Income from property rental (other than income from business) falls under passive income, for which the non-taxable part of the tax base cannot be claimed and which is not included in income for the assessment of eligibility for a tax bonus for dependent children.
- Income from property rental according to § 6 para. 3 of the ITA does not create an obligation to pay health or social insurance.
If you have any questions on this topic, you can contact tax advisors Ing. Marianna Zverková and Ing. JUDr. Viera Fraňová (zverkova@firemnedane.sk; franova@esum.sk), or we will be happy to answer them in our Consultation: Realty - consultation on FB. Our next topic, which we will bring to you soon, will be: income from the sale of property (owned by the seller for less than 5 years). We will also address practical real estate topics and related questions in our new FB group: Realty - consultation, on Facebook.
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Ing. Ľubomíra Lacková, kluc.sk@kluc.sk
