In the first half of each year, the majority of Brazilians have an engagement:. It is time to settle accounts with the Lion Among the various assets and rights, duties, gains and income that must be reported to the IRS, one in particular still is the cause of many doubts – rental income.
Immediately, capital smart city islamabad emphasize that the form of payment will be different only for Individuals, if the property is rented to either an Individual or Legal tenant.
Below we explain the procedure for declaring your income tax for each of these cases:
Property of Individuals, leased to Legal Entities
If your property is rented to a legal entity, the tenant or real estate agent chosen to mediate the relationship will be responsible for withholding income tax directly at source. Thus, you will receive the amount referring to the rent, already with tax deducted according to the table of the current IRRF, which can be consulted on the website of the Federal Revenue.
Thus, at the beginning of each year, the tenant or real estate agent must send the annual lease statement so that both the tenant himself and the landlord can declare in their income tax the amounts paid, received and taxes withheld consistently and consistent, preventing any of the parts from falling into the “fine mesh”.
Individual property rented to Individuals
If both the owner and the tenant are Individuals, the rental income must be collected monthly by the owner through the carnage-lion.
But how is it done?
Every month, more precisely until the last business day of the month following receipt, the owner must fill out the ticket, carnê-Leão, with the help of software available on the website of the IRS. Informing the amount received and legal deductions, the system automatically calculates the tax payable based on the current table.
If you prefer, you can consult the 2018 table on the Recipe website! =)
That done, when you declare your annual income tax, just import the data from the system. If you have not collected the leonet monthly in the last year, consult your accountant, and be sure to include it in the annual statement.
If your property is managed by Casa Mineira, check that the information included in the annual declaration is in accordance with the annual income statement sent by the company, thus avoiding any kind of divergence of information to the Tax Authorities.
Tip: If the IRS questions any information, it will be necessary to present all the receipts. The ideal is always to keep them, preferably printed, for at least 5 years. This action can prevent you from falling into the “fine mesh”.
As we mentioned at the beginning of this article, despite knowing that the collection of taxes for PF or PJ tenants is one of the main doubts of homeowners when declaring their income tax, there are still many other questions about the income received with the lease properties. With that in mind, we selected some more of these doubts in the Federal Income Tax Manual for Individuals and we hope that these guidelines can help you:
- Do I receive the rent amount only in the month following that received by the real estate company, how is the payment made?
The payment will take place in the month in which the lessee pays the rent to the real estate company, regardless of when it has been transferred to the lessor.
- How to verify the taxable rent income when the lease agreement contains a clause that allows the payment of expenses incurred in improvements by the tenant?
In this case, the amount of the rent received is taxed by subtracting, when the amount paid was exclusively from the owner, only the amounts relating to:
- a) taxes, fees and possible profits on the property;
- b) rent paid for the lease of subleased property;
- c) expenses paid for collection or receipt of income;
- d) condominium expenses.
The improvements made by the tenant and discounted from the rent, also constitute income for the owner and are subject to income tax. In this case, the owner must enter the “full” amount and not the amount actually received (discounted amount).
- Do I have to declare in my income tax, the premiums, gratuities or any other sums paid to the owner?
Yes. Any amount paid to the owner or to those who transferred rights and obligations, and established in a contract for the use of the property, are taxable income. This amount, as well as rents, must be declared through monthly payment (carnê-Leão), if received from individuals or, at the source, if paid by legal entities, and in the declaration of adjustment.
- What is the tax treatment given to the property given free of charge?
According to the regulation of the Federal Revenue, it is subject to income in the income statement of the individual, the equivalent to 10% of the venal value of property transferred free of charge, except for the use of the spouse or first degree relatives. Therefore, if the assignment (transfer in this case free of charge) of the property made to the person who is not a spouse or first-degree relative will be subject to taxation to the person who made the free assignment. If it is for a spouse or first-degree relative, they must declare the rental income in their declaration that they may be subject to taxation or not.
- How should I act when the leased property belongs to more than one individual?
When the leased property belongs to more than one individual, in a condominium, the lease must specify the percentage of rent that is due to each tenant. If this clause is not included in the contract, it is recommended to make an addendum to it.
If the tenant is a legal entity, they must withhold withholding tax by applying the current monthly table (IRRF) in relation to the amount paid individually to each individual. Annually, the tenant legal entity must provide proof of income that fits each one, with indication of the respective amount withheld at source.
In the case of common goods, as in the case of marriage, the income is taxed in the proportion of 50% in the name of each spouse or, optionally, can be taxed for the total in the name of one of the spouses.
As for the assets resulting from the stable union, the income is taxed in the proportion of 50% in the name of each cohabiting person, unless otherwise stipulated in a written contract, when the percentage provided for therein must be adopted.
With so much information, it’s normal to be scared! Therefore, we recommend that you hire a real estate agent and / or professional of good nature to manage your rental contract and count on the help of your accountant to ensure that your declaration to the IRS is done correctly and mainly that it does not bring future problems.