Have you rented a property on the basis of a concluded lease agreement in 2022? How to tax the rental income of this property? When to file a tax return? The real estate company HERRYS has prepared for you a summary of all essential information and news regarding the rental income tax.
We will advise you in six clear steps:
1. WHO
2. WHEN AND WHERE
3. HOW TO APPLY FOR A TIME EXTENSION
4. WHAT FORM
4. WHAT ARE TAX EXPENSES
6. TAX AMOUNT AND CALCULATION
1. WHO files a tax return
If you have rented real estate on the basis of a concluded lease agreement and it is not a rental of real estate performed on the basis of a trade license, the income you earn from such a lease is considered taxable income. This income must be declared in the income tax return.
The obligation to file a tax return arises if the sum of all taxable income of the taxpayer (ie also income from independent activity, business, other self-employed activity or other income) for the tax period of 2022 exceeds the amount of 2 289,63 EUR.
Income from the rental of real estate is exempt from income tax up to 500 EUR for the relevant tax period, so that the taxpayer will include in the tax base only income from rental of real estate, exceeding the amount of 500 EUR .
What applies if you are renting a property with your spouse?
If you own the leased property in the non-share co-ownership of the spouses, the taxpayers (spouses) may share the achieved rental income in the same proportion or in another ratio, which they mutually agree and is more advantageous for them. They will share the same expenditure on income, while both claim an exemption of 500€.
To illustrate, we give an example: In 2022, the couple rented an apartment, which they have a non-share co-ownership. In 2022, rental income amounted to 2,800 EUR. The husband was employed and the wife was on parental leave throughout 2022.
The spouses can share the rental income in the ratio chosen by them, and they have decided to share the income as follows:
• income of 2,300 EUR per wife
• for the spouse income of 500 EUR
Each of them can claim an exemption of 500 EUR. The spouse did not earn any taxable rental income after applying the income waiver of 500 EUR. The husband is not obliged to file a tax return due to the rental of the property and may decide to ask the employer to make an annual tax settlement. The wife will reduce the rental income attributable to her after the division, in the amount of 2,300 EUR , by the amount of exempt income in the amount of 500 EUR . This means that its taxable rental income for 2022 was 1,800 EUR (2,300-500). As the wife did not earn any other taxable income in 2022, she is not required to file a tax return, as her taxable income did not exceed 2 289,63 EUR.
2. WHEN and WHERE to file a tax return
You are obliged to file a tax return for income tax for the 2022 tax period by 31 March 2023. During this period, you are also obliged to pay the tax. The tax return is filed at the locally competent tax office.
The tax return can also be filed at a branch of the tax office or at the contact point of the tax office.
3. EXTENSION OF THE DEADLINE for filing a tax return
The deadline for filing a tax return can be extended by filing a notice of extension of the deadline for filing a tax return, which must be filed no later than the deadline for filing a tax return (by 31.3.2023) to the locally competent tax office ( provided that it is administered in paper form).
A natural person - an entrepreneur who is registered for income tax is obliged to submit a Notice of extension of the deadline for filing a tax return for 2022 on the prescribed form electronically. The form is available at the link below and you must log in to the personal internet zone to submit it.
https://pfseform.financnasprava.sk/Formulare/eFormVzor/DP/form.401.html
4. ON WHICH FORM the taxpayer files the tax return
Taxable rental income (after deducting the amount of the exemption of EUR 500) is stated in the personal income tax return of type B in VI. sections in table no. 1 in column 1. Tax expenditure is shown in column 2.
5. WHAT ARE TAX EXPENSES
In the case of income from the rental of real estate, only demonstrable expenses for achieving, securing and maintaining rental income on the basis of kept accounting (single or double entry) or on the basis of records may be applied (Section 6 (11) of the Income Tax Act). However, these expenses cannot be claimed in full by the taxpayer, but must be determined by the same ratio as the ratio of rental income included in the tax base in the tax return to total rental income.
You will best understand this with the following example: In 2022, the taxpayer achieved income from the lease of real estate pursuant to § 6 para. 3 of the Income Tax Act in the amount of EUR 6,000. The demonstrable expenditure incurred to achieve, secure and maintain this revenue amounts to 3 850 EUR.
The amount of taxable income from the rental of real estate is calculated by the taxpayer in the amount of 5,500 EUR (6,000 - 500) as the difference between the total income from the rental of real estate and the amount of 500 EUR, which is exempt from tax. Expenditure incurred in obtaining taxable income from the letting of immovable property may be recalled by the taxpayer only in the amount of 3,529.17 EUR [(5,500: 6,000) x 3,850].
If you have a property included in business property, you can claim in provable expenses the expenses incurred in connection with this property, such as:
- expenses for the acquisition of rented real estate (in the form of depreciation)
- expenses for technical improvement (eg reconstruction or redevelopment of real estate)
- expenses for its repairs and maintenance (eg painting of real estate)
- other expenditure connected with the use of the property (in particular expenditure on the proper operation of the property, such as energy expenditure)
- expenses for insurance of rented real estate, real estate tax, expenses related to payments of the owner of the apartment and non-residential premises in the house to the fund of operation, maintenance and repairs, interest on loans and borrowings for the purchase of rented real estate
other expenses (eg fees to a lawyer for drafting a real estate lease, fees to a real estate agency for arranging the lease of real estate, fees to an accountant for bookkeeping, postage for communication with the tax office, etc.)
If you do not have a property included in commercial property, you can claim as a tax expense only expenses for the proper operation of the property, such as energy expenditure, including expenditure on other services.
In the case of income from the rental of real estate, energy means the supply of:
- electricity
- heat for heating and domestic hot water
- drinking and domestic water
- gas
Other services related to real estate rental are in particular:
- drainage of wastewater from households
- lighting and cleaning of common areas in the house
- use of lift
- removal of ash, rubbish and sewage
- equipping the apartment with a common TV and radio antenna
- the Internet
In this case, you cannot include e.g. nor expenses for real estate insurance, real estate tax, contribution to the repair and maintenance fund, etc.
6. TAX AMOUNT AND CALCULATION
Procedure for calculating income tax on rental property:
- expenses are deductible from your income, which must be provable and must only serve to achieve, secure and maintain rental income, depending on whether or not you you have a property included in business property
- you will receive a tax base and income tax will be paid on it
WARNING
Last but not least, don't forget the obligation to register. If the taxpayer rents real estate or part of it on the territory of the Slovak Republic, and is not registered at the local tax office as a result of carrying out entrepreneurial or other self-employed activities, he is required to register, within the period until the end of the calendar month after the end of the month in which he rented real estate on the territory of the Slovak Republic.
This registration is important when applying the provisions of Act No. 98/2014 Coll. Act on short-term apartment rental, which requires the lessor to fulfil the registration obligation.
Source: Financial Administration of the Slovak Republic
