top of page

HOW PROPERTY OWNERS CAN AVOID THE TAX TRAP


Data from the Independent Authority for Public Revenue (AADE) show that in the tax returns filed in 2022 (for incomes in 2021), thousands of taxpayers declared that they did not receive any income from properties totaling 12.5 million euros. With the explosion that has occurred in the rental market over the past two years, the number of owners with uncollected rents is estimated to have increased significantly. These taxpayers, however, cannot simply avoid tax by declaring these amounts in their tax returns. Before their annual appointment with the Tax Office, they will need to take specific actions.


Specifically, landlords in order to zero out the tax burden should have issued against the tenant a payment order or an order for rental use, or a court decision for eviction or adjudication of rents or have filed a lawsuit against the tenant for eviction or adjudication of rents.


Then, they should submit to the Tax Office photocopies of the orders, court decisions issued, or lawsuits filed. If the required documentation for declaring uncollected rents is not submitted, then the amounts declared as uncollected income will not be taken into account, and the Tax Office will proceed with a new clearance of the declaration by taxing those specific amounts.


In case the tenant has gone bankrupt, the submission of a copy of the debt announcement table, which shows the claim of the lessor/sublessor, is required.

HOW PROPERTY OWNERS CAN AVOID THE TAX TRAP

From all the required documentation submitted to the Tax Office, the time period for which rents are owed should be apparent.


It is noted that according to the current scale, the annual net taxable income from rents is taxed separately from the first euro, after deducting a 5% percentage recognized as expenses for repair, maintenance, renovation, and other operational needs of the rented properties.


Rental incomes are taxed as follows:

  • 15% for the first 12,000 euros of income

  • 35% for the next 23,000 euros, i.e., for the portion of income from 12,001 to 35,000 euros

  • 45% for the portion of income above 35,000 euros.

If you need legal assistance in resolving disputes related to real estate, please contact our Law Office and we will provide you with a full range of legal services, starting from individual consultations and analysis of your situation, to preparation of necessary documents and representation of your interests in courts.

Comments


Commenting has been turned off.
bottom of page