Are you thinking about how you can avoid paying taxes on renting out an apartment? Read this article first
From time to time, our legal department specialists are asked a question about how not to pay tax for renting out an apartment and whether it is even possible to do so.
Below we will analyze 2 practical situations, after reading which you will be able to fully understand the situation. Be sure to study them carefully. Within the framework of our legislation, we strongly recommend paying taxes on the rental of an apartment. This is largely due to the fact that our site is a media outlet and we are obliged to give you such a recommendation. In general, do not avoid paying taxes under any circumstances, otherwise the tax inspectorate will one day “come to your home” and take various measures against you.
After we figured out all the risks of not paying taxes, an article appeared about the risks of renting out an apartment without paying taxes.
Below we have described cases in which the owner of an apartment decided not to pay taxes for renting out an apartment just so that you understand what not to do.
What are the risks of renting out an apartment without paying taxes?
If a person has free space, he can rent it out. Completing the action allows you to pay for the maintenance of your home and even earn money.
However, the transaction must be carried out in accordance with the norms of current legislation. If a person does not pay contributions to the state treasury, he can expect a number of negative consequences.
Experts advise you to immediately understand the risks of renting out an apartment without paying taxes .
The responsibilities of taxpayers can vary significantly depending on their status. This fact will also affect possible sanctions.
Typically, the measures taken against organizations are more severe. Experts do not advise violating the provisions of current legislation. We will talk further about what legal acts regulate the rental of premises, the liability of violators, as well as how to legally rent out premises.
What liability can be brought against a person who illegally rented out an apartment?
Illegal rental of housing is fraught with penalties. Their size directly depends on what specific norm was violated.
Thus, if a person has not complied with the provisions of Article 122 of the Tax Code of the Russian Federation and has not paid taxes, a monetary penalty in the amount of 20 to 40% of the unpaid amount will be applied to him.
The value of the indicator depends on whether the offense was committed intentionally.
If a citizen received income and did not submit a tax return, he violated Article 119 of the Tax Code of the Russian Federation. In this case, you will have to pay 5% of the contribution that needed to be transferred for each month of delay.
The total amount of the penalty cannot exceed 30% of the amount or be less than 1000 rubles. If a person has committed a significant violation of the requirements of the Tax Code of the Russian Federation, he will be brought to criminal liability.
Non-payment of taxes in the amount of more than 600,000 rubles is considered significant. for 3 years for citizens or 2 million rubles. for legal entities. The punishment will be established in accordance with the provisions of Article 198-199 of the Criminal Code of the Russian Federation.
The following sanctions may be applied to a violator who rents out premises without a contract:
- monetary recovery;
- involvement in forced labor
- deprivation of liberty;
- arrest.
The severity of the crime is taken into account.
Where can I file a complaint about illegal rental of an apartment?
In practice, owners only strive to obtain maximum income from renting out housing. Many apartment owners do not bother themselves with drawing up contracts. Due to the illegal rental of housing, not only the state budget, but also neighbors may suffer.
If the owner of an apartment looks only at the amount of money that clients are willing to give him, without understanding who exactly he is letting in, the behavior of tenants can often go beyond what is permitted.
If such a situation arises, neighbors have the right to complain about the landlord to the authorized body by writing a corresponding statement. First of all, you should inform the local police officer about the current situation. He has the right to find out on what basis citizens live in the premises.
If it is revealed that migrants or a person without registration live in the apartment, a representative of the authorized body will issue a resolution to impose an administrative fine. This rule is enshrined in Article 19.15.1 of the Code of Administrative Offenses of the Russian Federation.
If foreign citizens are illegally living in the premises, it is recommended to contact the migration service. Tax officials are interested in reports of illegal rental of premises. Therefore, you can complain about illegal business to the Federal Tax Service.
Upon receipt of the complaint, a representative of the authorized body will call the owner to provide explanations and conduct an inspection. If a citizen is proven guilty, penalties will be applied against him. Additionally, he will have to pay all accrued tax payments.
If representatives of the Federal Tax Service do not fulfill their obligations, you can file a complaint with the prosecutor's office.
Tax on renting out an apartment: how much and how to pay, and is it possible not to pay the tax?
She received about 30,000 rubles in cash from them every month. I rented out apartments without a contract and, accordingly, carried a lot of risks. One day she was summoned to the tax office, where she was accused of tax evasion. After that, Lydia turned to us. We explained to her that renting out an apartment in her case was not a business activity and advised her to explain all the details and circumstances to the tax inspectorate. As a result, she paid taxes for 2 years in the amount of 13% personal income tax. On top of this there is a fine for non-payment of tax for renting out an apartment.
2. A more interesting case, according to the lawyers of the elitearenda.ru company, was the following. In it, Elena I. rented out 3 apartments.
She entered into an agreement for the free use of residential premises with those who rented an apartment from her. At the same time, she did not rent out the apartment for free, but for cash.
She constantly had to spend time meeting with tenants. She later explained to tax officials that if the tenant were to transfer funds to her bank card, this would no longer be suitable. She quite rightly believed that if tax officials checked her bank accounts and discovered constant deposits of funds, monthly, identical in amounts, this could arouse their suspicion.
At the same time, she told us that it was almost impossible for the tax inspectorate to prove the fact of renting out the apartment, if not for the complaints and testimony of one of her former tenants, with whom she had a conflict. You can read about this at the very end of the previous article.
She rented apartments this way for 3 years and had no problems. Her property was protected by law from damage, fire and sweat with the help of an agreement for the free use of housing. However, some time later she had a conflict with one of the residents. He complained to the tax office and they carried out an inspection, during which the tenant met with Elena and gave her the “marked” bills. During the meeting, he verbally told Elena what he was transferring the money for, and Elena confirmed this. The recording was made on a dictaphone. Elena was arrested, and the tax inspectorate opened a tax evasion case against her. This was probably the only way to prove her guilt.
Then Elena contacted our company. Our experts immediately advised us to tell all the details to representatives of the tax office, pay all fines, and then issue a tax patent for renting out apartments, given that there are already 3 of them. She did just that.
It is noteworthy that later she told us that, in her opinion, if it were not for the conflict with the tenant, the tax office employees would definitely not have been able to prove the fact of renting out the apartment on a “commercial” basis and bring any charges against Elena. There is, perhaps, “nothing to object to.”
In general, our company’s specialists, of course, advise you to be vigilant and law-abiding.
How to pay tax for renting out an apartment
The owner must pay tax if he rents out housing to individuals (clause 1, clause 1, article 228 of the Tax Code of the Russian Federation). If the apartment is rented to an organization, notary, lawyer or individual entrepreneur , it is the tenant’s responsibility to pay tax, that is, he independently withholds and transfers to the tax office 13% of the rent due.
You need to transfer personal income tax to the budget yourself , without waiting for a tax notice to be received. The deadline for filing a declaration is no later than April 30 of the year following the one in which the profit was made. The tax must be paid before July 15 (clause 4 of article 228 of the Tax Code of the Russian Federation).
You can pay in the following ways:
- through the taxpayer’s personal account on the Federal Tax Service website;
- at a bank branch using a paper payment order;
- using a special service.
You can submit your return in person or through the tax website . You can fill out the form by hand or use the Declaration program .
What documents are needed to formalize the contract?
Drawing up a rental agreement for an apartment does not require collecting a large package of documents and various certificates, as, for example, for purchasing it. The standard set includes such mandatory documents as:
- A certificate of ownership of housing in the event of privatization of an apartment or an agreement that confirms the right to its ownership (for example, this could be a purchase and sale agreement or a Donation agreement);
- List of everyone registered in the apartment (extract from the personal account in the housing office);
- Notarized consent to rent from all owners of the apartment, if there are several of them. In addition, they must be present during the conclusion of the contract. This fact can save you from various future problems that may arise from the intervention of the co-owners of the apartment if they do not agree with its rental.
The tenant must provide a passport.
Sample of filling out 3-NDFL when renting out an apartment
Step-by-step instructions for filling out the 3-NDFL declaration when renting out an apartment under a rental agreement:
- On the title page at the top it is indicated Taxpayer INN, if the declaration is submitted for the first time - in the column correction number 0 is marked, then written year, for which the report is submitted.
- In the field “Submitted to the tax authority (code)” the number of the tax authority with which the taxpayer is registered is indicated.
Below are your passport details and taxpayer contact number.
- The item “Taxpayer Status” indicates the status of an individual: number 1 is indicated by tax residents, number 2 by non-residents.
- In second section declaration, the tax base and the amount of tax payable to the budget are calculated.
- Line 010 indicates the amount of income from renting out the apartment for the year, the same number is entered in line 030 .
Column 070 is calculated by multiplying the amount from column 030 by 13% .
What is a free apartment rental agreement and why is it drawn up?
If your tenant damages the housing, for example, by causing a flood or fire, then with the help of such an agreement you will be able to recover from him through the court the material damage that he caused through his carelessness.
You will also need this agreement in the event that your tenant causes damage to your neighbors. In this case, your neighbors can go to court so that you compensate them for the damage. You, in turn, will be able to file a counterclaim against your tenant. Subsequently, most likely, the court will recognize that you are right and will require the tenant to pay for the damage.
In court, you can mention why you allowed the tenant to live in your apartment. Most often, the fact is that this person is your friend from a very long time or a distant relative.
Also read the last part of this article. It tells you what tax you will have to pay when renting out an apartment and when to submit a tax return.
If you need detailed advice on tax issues related to real estate, please contact the consulting services section or call our company at +7.
To whom and how can you rent out an apartment and not pay taxes? Only legal ways
Renting housing is a good business for Moscow apartment owners. However, like any business, it is fraught with dangers and is associated with certain risks and mistakes. The “owner” found out the main mistakes of the owners of the rented apartment.
In the article “What should the owner of a rental apartment be wary of?” We talked about the risks that await the landlord, and now, continuing the topic, we’ll talk about the main mistakes that owners of rental properties make.
Mistake number one: the rental agreement
Real estate market specialists are unequivocal in their opinion - a rental agreement must be concluded without fail, no matter who the potential tenant is. Russians don’t really like to sign papers, and besides, we don’t have a standard legalized contract, so we either have to use those compiled by real estate agencies, or order a contract from a lawyer. Let us note that the Internet contains far from the best examples of contracts; they are often simply outdated. But in any case, concluding an agreement is a severe necessity. Owners often think that since the employer is an acquaintance or his position in a reputable organization is high, this will guarantee his integrity. Unfortunately, both among acquaintances and among highly paid managers of reputable organizations there are unscrupulous people, and people simply tend to forget some details if they are not recorded on paper.
Drawing up a contract correctly is not that difficult.
How to rent out an apartment legally
If the owner plans to rent out the property, then he should insure himself and conclude an agreement. This document, in addition to the passport data of both parties, must reflect all the terms of the transaction:
- date of conclusion;
- object of the contract;
- the period for which the delivery was made;
- price.
In addition to the rental agreement, it is possible to draw up an act of acceptance and transfer of the premises, where the most valuable things and their condition should be described. This act may be useful in proceedings with tenants. It's a good idea to get written consent from your neighbors.
Five simple rules to avoid tax problems when renting out your home
According to the law, a lease agreement drawn up in simple written form has legal force; it does not have to be certified by a notary; simply the signatures of the owner and the tenant are sufficient. The lease agreement should try to include as much information as possible about the premises being rented and the terms of the lease. At the same time, the owner should not be concerned about the scope of the contract - this parameter is not limited.
Key points that need to be reflected in the contract:
1. rental fee
. It cannot be changed unilaterally throughout the entire term of the contract;
2. contract time
;
3. listing of all residents, including children
, indicating passport details. This clause will save the owner from a number of troubles associated with subletting. For example, if Mr. Petrov is indicated in the rental agreement, then Mr. Sidorov with his nine brothers and five sons does not have the right to live there;
4. deposit (collateral)
. The deposit amount is usually equal to the monthly payment. Here it is important to write down not only the amount of the deposit, but also carefully list all those cases in which a certain amount will be withheld from the deposit in favor of the owner. For example, if in the contract a deposit is left for long-distance calls and damage to the TV, and the tenant breaks the cabinet, then the tenant cannot be fined;
5.who pays what bills, when and
. Typically, utility bills and subscription fees for a landline telephone are paid by the owner, and electricity and long-distance calls are paid by the employer. Internet is paid for as agreed;
6.despite the fact that by law the tenant must ask the owner’s permission for any changes in the apartment, experienced realtors advise adding a line to the contract stating that all rearrangements, redevelopments, subletting of the apartment, living in the apartment of third parties can only be carried out with permission owner;
7. payment delays
. Penalties should be specified for late payments - will penalties be charged, in what quantity, for how long the delay, etc.;
8. early dissolution
. Here you should specify the acceptable reasons for early termination of the contract, conditions, and the presence of penalties. The owner may stipulate that the deposit will not be returned in the event of early termination of the contract by the tenant;
9. if the apartment needs repairs
, then it is agreed upon which one and who will pay for what. As a rule, such things as changing plumbing, windows and any major repairs are paid by the owner, and the tenant can carry out cosmetic repairs at his own expense, although in some cases the owners pay the cost of materials;
10. current repair of all breakdowns of plumbing, electricity, batteries
also, as a rule, falls on the shoulders of the tenant. Although the law does not stipulate this point, and by agreement of the parties, the amounts spent can be deducted from the rent.
An integral part of the contract is the act of transfer of property. Without this document, it will be impossible for the owner to prove that there was this or that item in his apartment, and not just that it was, but that it was in working order. The owner can enter into this act everything that he considers necessary (within reasonable limits), right down to expensive handles on the doors. The act is drawn up at the time the tenant moves in.
When signing the contract, the landlord must provide, upon the tenant’s first request, the title documents for the apartment and the owner’s passport.
If the owner discovers that his apartment is not being used as stipulated in the contract, then, according to the law, the sequence of his actions is as follows:
1. oral/written warning and/or fine;
2. call the real estate agency (if the owner of the apartment rented it out without the help of an agency, and the warnings do not work, then you need to move on to the next point);
3. designation of the terms of eviction;
4. going to court.
In practice, rarely does anyone decide to go this route; everything is usually resolved through personal negotiations between the parties. In particular, because, according to Anna Lupashko, president of the Moscow Association of Realtors, less than 5% of owners of 100 thousand rental apartments in the capital pay taxes.
Mistake two: taxes
“Pay your taxes and live in peace” - this call will survive centuries. In relation to renting out an apartment, it couldn’t be more relevant. When renting housing, the owner pays a tax of 13% of the rental amount. This amount is small if we remember that in many Western countries the amount of such a tax reaches 50%. There are several other good reasons. Firstly, if the fact of tax evasion is revealed, the owner faces a rather large fine. Secondly, if taxes are not paid, blackmail is possible both from the employer and from neighbors and acquaintances. There are cases when the employer openly stated: “If you have any problems, I’ll hand them over to the tax office.” Thirdly, if problems arise with the employer, not everyone will decide to go to court for fear of a tax fine. Fourthly, it is impossible to become legal, for example, to register a tenant, and an apartment with such an option is traditionally more expensive on the market. Paying taxes is not that difficult. Once a year it is necessary to submit a tax return; when filling it out, they indicate the source of income, the amount of income and tax in the appropriate fields and pay it themselves, says Lev Ivanchenko, lawyer.
Mistake three: insurance
One of the ways to reduce risks in the rental business is home insurance. No collateral can cover the amount of damage in case of serious troubles. Insurance is especially important in cases where the owner is far away, for example, lives abroad, or neither the tenant nor the owner is to blame for the damage, for example, as a result of flooding, the tenant’s things were damaged.
By the way, in the latter case, according to the law, the owner must compensate for the damage. If insurance has been taken out, then the tenant will not have to wait for the owner to appear to compensate for the damage.
As a rule, large real estate companies offer owners a choice of several packages of insurance services, says Irina Bobko, head of the housing rental department of the Vavilon Group of Companies. It would be stupid to rely only on municipal insurance programs: in general, they only cover the restoration of the walls of the apartment, and not the property. It is also necessary to insure the civil liability of the tenant and separately the property located in the apartment. Insurance is especially important for owners of business-class apartments and luxury apartments, but owners of inexpensive apartments should also insure their property.
ARTICLES ABOUT REAL ESTATE AND TRAVEL >>>
Rent out an apartment in Moscow and go to the Caribbean - what’s it like, huh? Becoming a rentier is the dream of many young people nowadays. Of course, others set their alarm clock at 6 so they can go early in the morning to the stuffy metro or stand in traffic jams - but here it’s nature, warm, beautiful, clean, and you don’t have to work! Why not a fairy tale? Let's figure out how to achieve this.
So, where to get the coveted apartment?
I will immediately upset you, but 99% of rentiers simply died in time for their grandmother. That’s what they call them – grandma’s rentiers. But don’t despair, you can purchase housing on the secondary market or buy an apartment at the foundation pit stage. Where can I buy real estate? There are three options - in Moscow, in the Moscow region, in Zamkadye. I can’t tell you anything about the third one, since I’ve never been to distant Zamkadye. As for Moscow, if the price for a one-room apartment near the Moscow Ring Road is 6 million, you can rent it out for 35 thousand. If you have money not for a one-room apartment or in a residential area, I don’t know why you are reading this, you should have already invested in stocks and drank cocktails in the Dominican Republic.
If we take the near Moscow region, then prices for secondary housing range from 3 to 4.5 million rubles. You can rent it out for 20-25 thousand. Don’t forget to subtract 2-3 thousand for utilities from here.
So, the estimated profitability of renting out an apartment inside Old Moscow is about 6.5% per annum. In satellite cities - about 7-8.5%.
Option two – buying an apartment under construction.
What awaits you here? We are discarding Moscow, everything is clear with it. Prices from 2 million, if not completely in the forest without roads. As a rule, it is without finishing. Add finishing costs. Don’t forget to add the loss from freezing money for a year and a half compared to the secondary one (at least 2 is more realistic, because they will lie to you about the time frame just to sell it, and finishing is not done in a day). Total plus 700-800 thousand at a minimum. What is the final return on capital? Well, maximum 9% per annum.
What are the pitfalls of renting out a home?
There are two of them:
1) Inadequate tenants
2) Inability to find adequate tenants
Roughly speaking, while you are looking for normal people, you will lose money from downtime. If you sit down just anyone, you will lose money from the damaged furniture.
How to rent out an apartment and avoid paying taxes
The first option is renting out housing without a contract. In this case, the landlord is not protected, and tenants are suspicious of such offers. Another option is that the landlord does not pay taxes if the apartment is rented free of charge. There are two ways.
- You can enter into a free rental agreement. It will indicate that no rental fee will be charged. This option is good when there is trust in the residents and confidence in their integrity.
- The living space is rented out to relatives who live free of charge. A similar agreement is concluded indicating the absence of rent, which will also document the relationship between the owner and the residents.
From this video you can learn about ways to save money when renting out your home:
We have looked at all possible ways to rent an apartment with and without paying tax. Apartment owners usually want to feel safe, but may be intimidated by difficulties with documents. With the introduction of the new tax regime, registration and payment procedures have been simplified as much as possible. Tax on professional income or self-employed status is currently optimal, simple and beneficial for the landlord.
See also Phone numbers for consultation February 24, 2020 Victoria M. 292
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Discussion: 6 comments
- Andrey says:
02/25/2020 at 01:14Yes, your neighbors will be happy to rent if you rent out your apartment. Our people love to count other people's income and this does not allow them to sleep peacefully. It’s better, of course, to pay to sleep peacefully
Answer
- Marfa says:
02/26/2020 at 00:28
I believe that for the safety of yourself and your property, it is better to pay taxes and rent out your apartment openly and with all the documents. Each time you should enter into an agreement with the tenants.
Answer
- Ilya says:
02/27/2020 at 12:49
Of course, now 90 percent of apartments are rented out illegally. It’s correct, of course, that profits should be taxed, but since a lot of money is stolen from us, that’s why people are in no hurry to give their hard-earned money to the state
Answer
- Irina says:
03/02/2020 at 00:23
My sister is renting out her apartment. In order not to be afraid of the tax authorities, she decided to arrange everything legally. She opened an individual entrepreneur (individual entrepreneur) and pays taxes. The amounts are not astronomical
Answer
- 5master5 says:
03/04/2020 at 08:00
The statute of limitations is only three years. If the tax office does not find you during this time, then all debts are automatically forgiven. So, the main thing is not to pick up the phone and not to let anyone into the apartment.
Answer
- julia_wilman says:
04/11/2020 at 22:10
In normal countries there is a tax on expensive real estate. You pay tax, regardless of whether you rent an apartment, live in it yourself, or if it is empty. In our country there’s no need to bother; I haven’t heard of any cases where the tax authorities get to the bottom of this. But if you rent through a company, then this may be important.
Answer
Rent out an apartment and not pay taxes
tiles, plumbing fixtures, etc. Plus, downtime reduces overall profitability by a percentage or two per year.
Well, the soft part - from Punta Cana you won’t look for particularly tenants in Mytishchi - well, you can have caring friends, relatives or an agent who will take a hefty percentage for this - the service is called trust management of the apartment and is not cheap relative to the rental price - 5 thousand per month, according to -to me. By the way, realtors in such cases recommend insuring your home - that’s another 1-2 thousand a month.
Let's sum it up:
You need:
1) find somewhere at least 2.5 million rubles.
2) wait 2 years
3) spend a lot of time and nerves on decorating and buying furniture, kitchen and other utensils
4) be constantly looking for tenants
And all this for 20 thousand rubles a month at the exit! Life is good! $$$
Do I need to explain that I can’t live on this? At least Google the prices for tickets to the sea. An attentive reader will say: “Alice, but you yourself live on renting an apartment!” This is not true. Since I am a woman, my husband provides for me. Income from renting out an apartment is enough to buy ice cream, lipstick, and stockings for me. Well, plus my mother will scold me if I sell this damn apartment - although I would have enough money for the rest of my life. It’s a completely different matter to rent out two apartments, which is why I bought a new one. But this only applies to grandma’s rentiers.
Published in: Real Estate
What happens if you don't pay taxes
You need to pay taxes. According to Article 208 of the Tax Code (Tax Code of the Russian Federation), income received from leasing is subject to taxation. The tax rate is 13%. You can acquire self-employed status, in which case the tax will be even lower - 4%.
Read on the topic: How to become self-employed: detailed instructions for 2019
According to Article 122 of the Tax Code of the Russian Federation, the fine for non-payment of tax is 20% of the amount of evasion, and in the case of deliberate actions - 40%.
It is worth considering that first the tax office must send a demand for tax payment.
