Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.
This Three-part series of articles is on the ‘thrilling’ subject of Land and property Tax.
This week we continue to raise and answer the most popular questions from clients on Land and property tax, having already addressed the questions 1 to 7 in the previous articles.
8. Should I register with the tax office if I rent out my apartment ?
The law requires that owners who are renting a property out to register the lease and pay tax on it.
In the past, the rental income tax was 16%, but it was changed to 10% of the rental income after 2010. If an owner does not register, they run the risk of being found out by the tax department, and back taxes with penalties will be applied.
9. How do the tax department know if my property is being rented ?
There are several ways this can happen.
The owner can register themselves, and the tenant can also register the lease. In many cases the tax department are made aware because the tenant claims back some rental allowance from their company, and the rental agreement becomes part of the company tax filing.
10. What happens if a tax bill is late or not paid ?
Tax bills MUST be paid, they are debts to the government who track and recover the debt at all costs.
For late bills, when a bill is requested you can only know the exact amount payable that day. The tax office will provide a slip that allows the bill to be paid on that day only.
If a tax bill remains unpaid, the outstanding tax will be a factor when the property is sold and the transaction will not take place until the current debt is cleared.
11. I already paid tax for last year, but now I see another, much larger, amount of tax. Why ?
If the tax office discover that a property has been rented, they will charge the tax retrospectively.
Any tax that has already been paid is offset against the new tax bill, and they charge nominal penalties for non-registration of the lease.
It is also worth noting that if this happens and the owner does not pick up the notification from the tax office, a bill can sit and remain unpaid indefinitely incurring interest until the account is cleared in the late payment office.
That concludes this week’s article. Please feel free to email any questions to the address below and we will be happy to answer you.
Next Week: Final Part