Tax declaration is the obligation of every citizen, so in the case of renting a personal house, it is also necessary to declare taxes to the state agency. Because this is one of the business activities that requires paying taxes to the state agency. Below are the findings of Viet My on how to personal rental tax declaration, please refer to it.

1. Regulations on paying tax on house rentals 2024

Pursuant to Article 4 of Circular 40/2021 of the Ministry of Finance, the taxable revenue of individual business households renting houses is as follows:

– Individual business households with revenue from house rental activities in the calendar year of less than VND 100 million are not required to pay VAT and personal income tax according to the provisions of law on VAT and personal income tax.

Individual business households are responsible for declaring taxes accurately, honestly, completely and submitting tax records on time, individuals are responsible before the law for the accuracy, honesty and completeness of tax records according to regulations.

– Individual business households in the form of groups of individuals or households have a revenue of less than VND 100 million/year, to determine whether individuals are not required to pay VAT and personal income tax, it is determined for only 1 representative of the group of individuals or households in the tax year.

Thus, it can be seen that individuals who rent out houses must pay taxes to the state when their revenue in a year is over 100 million VND.

2. Do they have to pay taxes when renting out houses?

According to Point a, Clause 1, Article 9, Circular 40/2021 of the Ministry of Finance stipulates as follows:

Individuals who rent out assets are individuals with revenue from asset leasing activities including assets such as houses, premises, shops, factories, warehouses without accommodation services; leasing of means of transport, machinery and equipment with operators; leasing of other assets without services. Accommodation services not included in asset leasing activities according to the guidance in this regulation include: providing short-term accommodation for tourists and other transient guests; providing long-term accommodation facilities other than houses or apartments for students, workers and similar subjects; providing accommodation facilities with food and beverage services or entertainment facilities.

Thus, business households or individuals who rent out houses are subject to VAT and personal income tax. In addition, landlords must pay additional business license tax when their annual revenue reaches over VND 100 million. The annual business license fee payable will be based on the charter capital stated on the business license and the average annual revenue of that individual.

3. What taxes must individuals who rent out houses pay and how are they calculated?

3.1 Taxes that individuals who rent out houses must pay

The taxes that individuals who rent out houses must pay will depend on the level of revenue. Individual businesses that rent out houses must pay the following taxes:

First is the business license fee:

Based on Decree 139/2016 of the Government, when individuals do business in renting out houses, they need to consider paying the business license fee.

– If the revenue is less than 100 million VND per year, they will be exempt from the business license fee.

– If the revenue is over 100 million VND/year, they will have to pay the business license fee, with the tax rate specified in Decree 139/2016 of the Government.

Second, value added tax (VAT):

According to the 2008 Law on Value Added Tax, house rental activities are subject to VAT.

However, individuals with revenue from production and business activities of less than VND 100 million per calendar year will not have to pay VAT.

In case of revenue of more than VND 100 million per year, they will have to declare and pay VAT, at a tax rate of 5% of the revenue subject to VAT, according to the provisions of Circular 40/2021 of the Ministry of Finance.

Third, personal income tax (PIT):

According to the Law on PIT, individuals who rent out houses are subject to PIT.

Specifically, if the annual revenue from production and business activities is less than VND 100 million per calendar year, this individual will not have to pay PIT.

For individuals with revenue of more than VND 100 million per year, they need to pay PIT at a tax rate of 5% of the revenue subject to PIT, according to the provisions of Circular 40/2021 of the Ministry of Finance.

Thus, the tax payment for individuals renting houses depends on the annual revenue, with taxes including business license fees, VAT, personal income tax and the tax amount to be paid is determined based on the provisions of law.

3.2 The latest way to calculate house rental tax

Based on the above regulations, individuals who rent out houses with a total revenue in a calendar year of over VND 100 million must pay personal income tax, business license fees and value added tax.

Accordingly, taxable revenue is the total revenue in the calendar year of house rental contracts.

– In the case of a tenant paying rent for many years in advance, when determining the revenue level of VND 100 million per year or less, to determine whether an individual is not required to pay tax, it is the one-time payment revenue that the tenant has paid.

– In the case of an individual co-owning a house for rent with a revenue level of less than VND 100 million per year, to determine whether an individual is not required to pay tax, it will be determined for only 1 representative in the calendar tax year

For example: B and C are co-owners of a house, in 2023, the two people agree to rent it out at a rental price of VND 180 million/year and B is the representative to perform tax obligations. Thus, individual B is subject to value added tax and personal income tax on revenue from house rental activities with taxable revenue of 180 million VND.

* Taxable revenue

Pursuant to Clause 1, Article 10 of Circular 40/2021 of the Ministry of Finance, taxable revenue for private housing rental activities is determined as follows:

– Revenue subject to value added tax is revenue including tax on the amount of money the tenant pays periodically according to the lease contract and other revenues, but excluding fines or compensation that the lessor receives according to the agreement in the lease contract.

– Revenue subject to personal income tax is revenue including tax on the amount of money the tenant pays periodically according to the lease contract and other revenues such as fines and compensation that the lessor receives according to the agreement in the lease contract.

– In case the tenant pays the rent in advance for many years, the revenue subject to value added tax and personal income tax is determined according to the one-time payment revenue that the tenant has paid.

* Determining the amount of tax payable

According to Clause 3, Article 10 of Circular 40/2021 of the Ministry of Finance, the formula for calculating tax on house rental activities is as follows:

Amount of value added tax payable = Revenue subject to value added tax x 5%

Personal income tax payable = Revenue subject to personal income tax x 5%

* Time to determine taxable revenue

The time to determine revenue for tax calculation is the beginning of each payment period based on the house rental contract.

Thus, individuals renting houses must pay personal income tax and value added tax if the total revenue in the calendar year is over 100 million VND. According to the law, the taxpayer is the lessor, but in reality, when renting an office, in many cases the taxpayer is the lessee, so the parties need to clearly state who is obligated to pay tax in the house rental contract before renting the house.

4. How to personal rental tax declaration?

Declaring tax on house rentals in 2024 for individuals doing house rental business is carried out according to the instructions in Circular 40/2021 of the Ministry of Finance, specifically:

First is preparing tax declaration documents:

Tax declaration documents for individuals who rent houses and directly declare tax to the tax authority:

– Tax declaration for house rental activities according to form No. 01/TTS issued with Circular No. 40/2021/TT-BTC;

– Appendix of detailed list of house rental contracts according to form No. 01-1/BK-TTS issued with Circular No. 40/2021/TT-BTC;

– Copy of house rental contract, contract appendix (if it is the first tax declaration of the Contract or Contract Appendix);

– Copy of Power of Attorney as prescribed by law (If the individual renting the house authorizes a legal representative to carry out tax declaration and payment procedures).

The tax authority has the right to request the presentation of the original to compare and confirm the accuracy of the copy compared to the original of the power of attorney.

Second, the place to submit tax declarations

The place to submit tax declarations for individuals who directly rent out their houses and declare taxes to the tax authority according to the provisions of Article 45 of the Law on Tax Administration 2019, specifically as follows:

– Individuals with income from renting out houses (except real estate) must submit tax declarations to the Tax Department directly managing the place where the individual resides.

– Individuals with income from renting out real estate must submit tax declarations to the Tax Department directly managing the place where the real estate is rented out.

Third, the deadline for submitting tax declarations

The deadline for submitting tax declarations for individuals who directly rent out their houses and declare taxes to the tax authority:

– The deadline for submitting tax declarations for individuals who declare taxes for each payment period is no later than the tenth day from the start date of the rental period of the payment period.

– The deadline for submitting tax declarations for individuals who declare taxes once a year is no later than the last day of the first month of the following calendar year.

Fourth is the tax payment deadline

The tax payment deadline for individuals who directly rent out their houses and declare taxes to the tax authority is implemented according to the provisions of Article 55 of the 2019 Law on Tax Administration, the deadline for tax payment is the last day of the tax declaration deadline.

If supplementary tax declarations are made, the tax payment deadline is the deadline for submitting the tax declaration for the tax period with errors.

Thus, it can be seen that individuals who rent out houses must pay taxes to state agencies in accordance with regulations when their revenue is over 100 million VND within 1 calendar year.

Above are Viet My’s findings on How to personal rental tax declaration? Please contact VIET MY LAW AND ACCOUNTING immediately if you have any further questions about tax procedures and processes.