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Are utility expenses taken into account when calculating tax on rental income?
Are utility expenses taken into account when calculating tax on rental income?
As an individual, I have rented out my apartment to another local individual for 600 manats, including utility expenses. I would like to know: when calculating withholding tax, is the 10% tax applied directly to this amount, or is it calculated after deducting utility expenses?
According to the information provided by the State Tax Service under the Ministry of Economy, pursuant to Article 124.1 of the Tax Code, income derived from renting out residential properties owned by individuals (excluding hotels and hotel-type accommodation facilities) to individuals is subject to a 10% withholding tax.
Individuals registered with the tax authority who make such payments are required to withhold the tax at source. The person responsible for withholding tax from rental payments must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and must submit a withholding tax return to the tax authority.
If the person paying the rent is not registered as a taxpayer, then the individual renting out the property, or their appointed tax agent, must register with the tax authority (obtain a TIN) and calculate the 10% tax on the income earned. They must also submit an income tax return by no later than March 31 of the year following the reporting year and pay the calculated tax to the state budget within that period.
In response to the inquiry, it was stated that the tax liability on rental income from real estate is applied to the rental amount specified in the contract between the parties. If the contract states a rental amount of 600 manats, the tax is calculated directly on that amount.
Basis: Articles 124, 150.1.6 of the Tax Code
As an individual, I have rented out my apartment to another local individual for 600 manats, including utility expenses. I would like to know: when calculating withholding tax, is the 10% tax applied directly to this amount, or is it calculated after deducting utility expenses?
According to the information provided by the State Tax Service under the Ministry of Economy, pursuant to Article 124.1 of the Tax Code, income derived from renting out residential properties owned by individuals (excluding hotels and hotel-type accommodation facilities) to individuals is subject to a 10% withholding tax.
Individuals registered with the tax authority who make such payments are required to withhold the tax at source. The person responsible for withholding tax from rental payments must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and must submit a withholding tax return to the tax authority.
If the person paying the rent is not registered as a taxpayer, then the individual renting out the property, or their appointed tax agent, must register with the tax authority (obtain a TIN) and calculate the 10% tax on the income earned. They must also submit an income tax return by no later than March 31 of the year following the reporting year and pay the calculated tax to the state budget within that period.
In response to the inquiry, it was stated that the tax liability on rental income from real estate is applied to the rental amount specified in the contract between the parties. If the contract states a rental amount of 600 manats, the tax is calculated directly on that amount.
Basis: Articles 124, 150.1.6 of the Tax Code