Changes in tax policy are always unavoidable over time. How will the new policy in 2024 affect businesses and individuals who are engaged in renting out their homes?
Against this backdrop, a key question emerges: what taxes do businesses and individuals have to pay when they rent out their homes?
First, let's look at the tax situation of corporate rental housing. According to the latest tax regulations, the VAT rate for businesses renting out their premises mainly depends on the time of acquisition of the property and the nature of the rental.
Under normal circumstances, the VAT rate for renting out houses is 9%, but if the immovable property was acquired before April 30, 2016, it can be calculated according to the simplified tax calculation method of 5%.
If a business rents out a dwelling, it can enjoy certain tax benefits, for example, VAT can be calculated at a rate of 5% minus 1.5%.
Let's take a look at the tax situation for individual rental homes. Individual rental homes are also subject to VAT and personal income tax.
Personal income tax, in particular, is more complex to calculate, depending on the amount of rental income and the expenses deducted.
Personal income tax is usually levied at a rate of 10% on income from rental housing, but certain expenses such as repair costs are also allowed to be deducted from rental income.
In such a volatile tax environment, it is essential for every landlord to understand and stay on top of the latest tax policies.
Only then will they be able to minimize their tax burden while complying with the law. Let's take a closer look at how these tax rules apply in real life with a real-world example.
In our case, Mr. Komatsu rented out a house in Jinan City to Xiaomei at the end of February 2023 for a period of six months.
The contract stipulates that the rent is 9,000 yuan, which is to be paid in a lump sum. Mr. Komatsu paid 300 yuan in March to repair his house. In this case, how does Mr. Komatsu need to pay his taxes?
Consider VAT first. According to the relevant regulations of Shandong Province, Mr. Komatsu's monthly rental income is less than the tax-free standard of 100,000 yuan, and he is not required to pay VAT and additional taxes. This is undoubtedly a big plus for Mr. Komatsu.
Next up is the issue of property taxes. Since Mr. Komatsu is exempt from paying VAT, the rental income is not deducted from the VAT amount when calculating the property tax.
According to the relevant provisions of the property tax, Mr. Komatsu needs to pay 9,000 yuan per month to pay the property tax divided by 6 (the number of months of the lease period) multiplied by the 4% tax rate and the 50% reduction range, for a total of 30 yuan.
Finally, there is personal income tax. After receiving a one-time rent, Mr. Komatsu is required to file and pay individual income tax in the following month.
The specific calculation method is to deduct 180 yuan and 300 yuan from 9,000 yuan, then subtract 20% of the expenses, and finally calculate the personal income tax at a rate of 10%, totaling 681.6 yuan.
Through this case, we can see that even in the face of changing tax policies, as long as these regulations are fully understood and applied, home lessors can still effectively manage their tax burden.
This not only reflects the rationality of the tax law, but also provides some support for the stable development of the rental market.
Changes in tax laws are often accompanied by socio-economic development, and they reflect the support and regulation of different economic activities by the state.
As citizens, it is not only our responsibility to understand and comply with tax laws, but also the embodiment of our smart life.
In this ever-changing tax environment, how can we better adapt and leverage these policies to maximize our own economic benefits?
This is not only a test of our financial management ability, but also a way for us to participate in socio-economic activities.
By making rational use of tax policies, we can not only reduce our own economic burden, but also contribute to the healthy development of society.
Therefore, let's keep an eye on tax policy and respond rationally to various tax changes, so as to move forward in a volatile market environment.