Taxation of rental income in Russia
Below is the description of taxation options the citizens have when giving their residential property for rent in 2018.
Individuals who are not registered as Individual Entrepreneurs:
When renting out real estate, an individual who does not have the status of an Individual Entrepreneur must pay Personal income tax.
In 2018, the personal income tax rate is 13% for residents (the citizens who spent in Russia more than 183 days in the year in which the profit was received) and 30% for non-residents (the citizens living outside Russia for more than 183 days in the year in which the profit was received).
In addition to paying the tax, the individual is required to declare his profit in 3-НДФЛ form and submit it to the tax department of the district where he has his permanent registration. It is necessary to submit the declaration before April, 30 of the year following the year in which the income was received. One can submit the declaration as follows:
- Personally or through a representative with a notarized power of attorney
- By mail (sending the documents in a registered letter with the list of the attachments)
- Via electronic communication channels with an electronic digital signature.
Individual Entrepreneurs with General taxation system:
If you are an Individual Entrepreneur with General taxation system you have to pay the Personal income tax by quarterly advance payments.
You can decrease the profit subject to taxation for the amount equal to your professional deductions.
If the Declaration of income is not submitted before May 04, the citizen will be held liable to pay a fine of 5% of the amount to be paid for each month of delay, but not more than 30% in total, and not less than 1000 rubles.
Individual Entrepreneurs with Simplified taxation system:
If you are an Individual Entrepreneur with Simplified taxation system you will have to pay the tax according to the chosen object of taxation - 6% (the profit) or 15% (the profit minus expenses). When renting out real estate they normally choose to pay 6% of the profit.
Individual Entrepreneurs with Simplified taxation system can reduce the profit subject to taxation for the amount equal to their insurance contributions.
During the year, the Individual Entrepreneurs with Simplified taxation system must pay 3 advance payments after each quarter and the last one after the end of the year:
- for the 1st quarter - until April 25.
- for the half-year – until July, 25.
- for 9 months – until October 25.
- for the last quarter – until April 30 of the following year.
The Declaration should be submitted once a year before April 30 of the year following the year in which the income was received.
Individual Entrepreneurs with patents:
The Individual Entrepreneurs who decided to buy a patent for giving their apartments for rent must pay the tax equal to 6% of the imputed income established by the law for this activity.
The amount of the potential income is established by the normative acts of the regions. In Moscow, such income is determined in accordance with the law No. 53 dated 31.10.2012, its size depends on the location of the house and ranges from 210 thousand rubles to 10 million rubles per year. The potential income is calculated for each apartment individually.
The patent term can be from 1 month to a year. Depending on the term of the patent, they determine its cost and the order of its payment.
In addition to paying for the patent, the Individual Entrepreneurs have to pay only for their insurance contributions. The cost of the patent cannot be reduced for the insurance contributions amount. In the case of the patents, the tax declaration is not required.
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