Tax on rental real estate

If you own rental real estate, you should be aware of your tax responsibilities. All rental income must be reported on your tax return, and in general the associated expenses can be deducted from your rental income.

Rental incomes

Rent, security deposit, renewal fee, key money, common area maintenance charge.

※Note 1: Security deposit which is refundable to the tenant is not an income.

※Note 2: the income gained over the passage of time must be recorded at the end of the lease.

Rental expenses

Fixed asset tax, city planning tax, business tax, utilities shared, borrowing interest (the portion of interest paid after the rental starts), maintenance (excluding the maintenance fee that belongs to capital outlay), insurance (annual premium which is paid out without future refund) etc.

When you buy a property for the purpose of rental, you can deduct the expenses occurred in additional to the cash paid to acquire the property.

Expenses

Individual

Corporation

1. License registration tax; real estate purchase tax

Deducted as expense;

(can be included in the property purchase price if wished)

+ Deducted as expense; or

+ Included in the property purchase price

2.  Judicial scrivener fee

Deducted as expense;

(can be included in the property purchase price if wished)

+ Deducted as expense; or

+ Included in the property purchase price

3.  Stamp duty

Deducted as expense

4.  Dealer commission

Included in the property purchase price

5.  Tenant removal expenses

Included in the property purchase price

6.  Fixed assets tax & City planning tax

Included in the property purchase price

7.  Old building demolition expense

Included in the land purchase price


 


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