How to settle the tax on renting an apartment?

Many of us own properties that we do not want to sell, treating them as an additional source of income. Nothing wrong with that. Thanks to this, we ensure a stable monthly income and a simultaneous guarantee that the apartment is not deteriorating due to the long-term shortage of tenants.

When deciding on such a step, we must be aware that the payment, which is the tax on flat rental, will not pass us. The choice of how we do it is ours. Read about how to settle accounts with the tax office for renting premises, types of rentals and documentation that you cannot forget.

The story about rental tax – chapter one

Let’s assume this scenario: our family has grown and in our two-room apartment it has become far too tight. A decision is made to take out a mortgage and buy a house on the outskirts of the city. Nothing prevents you from selling your existing flat, but remember that an appraiser will almost certainly value it for a lower amount than we would like to get.

We know – sentiments are not in his mind. You can also read our text ESTIMATED OPERATION – VALUE OF THE BENEFITER, in which we write, which will most likely pay attention to in the valuation. What is the best way out of this situation? Renting an apartment. Although we have heard stories about tenants from hell, we manage to find a nice, quiet couple who decide to rent your four corners for at least one year. So it’s time to move on to business.

How to settle the tax on renting an apartment?

Making a flat available for a fee to the Tax Office is enriching. And you have to pay tax on enrichment. Before we get into the details, let’s just mark what revenue is, according to the tax authorities. This is a profit that we actually and in accordance with the contract receive from tenants. If the tenants do not pay for a month, the landlord has no income. The exception (!) Is renting an apartment as part of a business. Then the amounts due are considered receivable and not physically received. Once we have this awareness, let’s consider three options on how to settle your rent:

  1. Tax according to scale; choice of taxation on general terms (18 or 32%, depending on the amount of income). It is used privately or as part of an economic activity established for this purpose. It pays off most if you plan to invest a lot in a rented property to, for example, move back into it someday. Let’s not forget that expenses related to renovations can be included in costs, and thus lower our income. In this situation and the tax will be lower.
  2. Settlement for renting under an established company, but according to the principles of flat tax and 19% rate.
  3. The decision to settle the registered lump sum in the amount of 8.5%. This option is most often used privately, both for occasional rentals and when other lease agreements not related to any business activity are involved.

Each of these variants has its pros and cons, which is why it is so important that we make the best choice for ourselves in a timely manner.

We chose the accounting method – what next?

If we rent tenants our private apartment, the most optimal option for us will be a lump sum settlement. We must then make a written statement containing a declaration of choosing this form of taxation and submit it to the head of the Tax Office. It is important to do this at the latest on January 20 or on the 20th of each subsequent month, when we achieved the first income due to renting an apartment.

Failure to meet these deadlines will result in the loss of the right to make decisions yourself. Latecomers and forgetters have then no other option than to settle according to general principles (see point 1 in the previous paragraph). The good news is that nothing is forever, also such a “punishment”. A statement (this time within the deadline) about the choice of a lump sum as a form of settlement for renting an apartment can be submitted in the following year. It will also apply to tax in the following years.