Hi.
I've read your information on the various taxes listed out, but i just need some clarification which a lot of people and real estate developers can't really answer. I have a pre-selling unit which I purchased a few years back and I’m looking at potentially renting it out.
· I am a non-resident alien. I am also NOT engaged in trade or business in the Philippines, and do not stay in the country for more than 180 days in a year. Am I exempt from paying taxes if I would have my unit rented out? Exemption would be on the Income Tax on income received from Rental?
· As a foreigner, do I have to inform the BIR or only if I have to issue official receipts to my tenant?
· If my annual income is below Php 1.5M and if I’m required to register my rental with BIR, how much is the VAT?
· If the VAT is applicable, do I charge it to my tenant?
· How are Real Property Taxes enforced and how is the RPT paid? (show link on Rental Property Tax)
· As a non-resident alien leasing my unit, am I subject to Income Tax as per my rental income? What would the Income Tax be?
· Can I deduct depreciation, monthly dues and property management fees as well as mortgage before I file my income tax?
· Can I employ someone to handle filing of taxes for me? If so, how much will the service be?
I hope to get a favorable reply from you.
Cheers
Irwan
Hi Irwan,
Thank you for your very good questions.
Yes, you need to inform BIR. If you intend to lease your unit, then you are conducting business, regardless if you do not stay in the country long enough. You will need to file an income tax return and issue an official receipt to your tenant because tenants will need the receipt when they file their income tax.
However, the computations on your income tax based on your salary should be answered by BIR.
Taxation can be complicated because it in many instances, it is on a case-to-case basis. Meaning, your situation may be different from others and so the process for you could be different.
Please go directly to BIR or visit bir.gov.ph for more accurate answers based on your personal situation. A word of causion, please be very careful when dealing with consultants because sometimes, third-party consultants are illegal 'fixers' and may illegally charge you more than necessary.
Thanks again for reaching us and all the best!