What taxes do individuals who lease land and properties need to pay?

Do you have a vacant piece of land and need to rent it out to earn extra income? Or do you have an empty house that you need to rent out to earn extra income? But you don't know the tax regulations? What taxes need to be paid? This article by TASCO will answer all your questions about taxes to be paid when individuals lease land and properties.

1. Regulations on whether individuals who lease land and properties pay tax or not? What is an individual who leases land or property?

📌 For activities of leasing houses, land use rights, water surface, and other assets without business registration, taxpayers are individuals who own houses, land use rights, water surface, and other assets. In case many individuals jointly own houses, land use rights, water surfaces, and other properties, the taxpayer is each individual who has the right to own and use.

📌 Land and property lessor is an individual that generates revenue from property rental, including rental of houses, premises, shops, factories, and warehouses, excluding accommodation services; leasing means of transport, machinery, and equipment without the operator; leasing other assets without services. Accommodation services that are not included in property rental under the guidance in this Clause include: provision of short-term accommodation facilities for tourists and other visitors; providing long-term accommodation other than apartments for students, workers, and the like; providing accommodation with food service or recreational facilities.

📌 Individuals leasing land and properties shall declare tax according to each payment period, determined according to the beginning of the lease term of each payment period, or declare tax according to the calendar year. Individuals declare tax under each contract or declare tax for many contracts on one declaration if the rental property in the area is managed by the same tax authority.

📌 If an individual leases land or property without generating revenue for the full 12 months in a calendar year (including the case where there are many lease contracts), the turnover rate of VND 100 million/year or less is used to determine the individual. The property leasing person is not required to pay VAT or PIT which is the taxable turnover of a calendar year (12 months); The actual taxable turnover to determine the payable tax amount in the year is the revenue corresponding to the actual number of months incurred for leasing the property.

⇒ Note: In case the lessee pays the rent in advance for many years, when determining the turnover of 100 million VND/year or less to determine that the individual who does not have to pay VAT and does not have to pay PIT is a business enterprise. lump-sum collection amortized according to the calendar year.

2. Tax bases for individuals leasing land and properties:

🔅 The revenue for calculating value-added tax for property leasing is the tax-inclusive revenue of the amount paid by the lessee in each period under the lease contract and other revenues excluding fines and compensations. received by the lessor as agreed in the lease contract.

🔅 The revenue subject to personal income tax for property leasing is the tax-inclusive revenue (in taxable cases) of the amount the lessee pays each period according to the lease contract and other revenues including: fines and compensation received by the lessor as agreed in the lease contract.

⇒ Note: In case the rent is paid once for many years of the lease, the revenue subject to value-added tax and personal income tax is determined according to the one-time payment.

3. How to determine and calculate the payable tax amount of an individual leasing land or property:

Excise:

📜 License tax is a tax that must be paid by business owners (lessors) with annual revenue of over VND 100 million. The license fee will be paid based on the registered capital stated on the business license and the average annual income of the lessor. Specifically, the license fee payment rate for landlords is specified in Article 4, Clause 2 of Decree No. 139/2016 / ND-CP as follows:

⇒ Note: Individuals and households must pay a license tax for the whole year if income from house rent arises in the first 6 months of the year. In particular, for housing lease contracts arising in the last 6 months of the year (starting from July 1st), the payable license tax amount is equal to 1/2 of the annual license tax amount.

⏩ Personal income tax and value-added tax:

The tax rate calculated on revenue for property leasing activities is 5% VAT and 5% PIT. The payable tax amount for property leasing activities is determined as follows:

Amount of VAT payable = VAT calculation revenue x VAT rate 5%

PIT payable = Taxable revenue x PIT rate 5%

⏩ Summary:

If the total revenue from leasing land and assets is > 100 million/year, the land and property lessor must pay as follows:

Total tax payable = (Revenue X 10%) + License tax

⇒ If you have any questions or need assistance with property rental tax declaration and payment, please register here for TASCO's earliest advice and support or contact hotline: 0975480868 (Zalo)

TASCO TAX CONSULTING SERVICES CO., LTD

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