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It may be that an important change affects your rental income and expenses during the tax year – you may get a new tenant, your rental apartment may be unoccupied for a certain time, or the housing company may start collecting a new monthly payment.
Report updated facts and information to the Tax Administration when
If a big change occurs in your rental income and related expenses, we recommend that you inform the Tax Administration of this without waiting until the end of the year, so the new rental contract or other changes can be included in a revised calculation of tax prepayments or tax-card withholding. We recommend that you log in to MyTax to send a new tax card request or a new prepayment request, complete with the up-to-date rental income.
Please note that you must ask the Tax Administration to lower or to stop your prepayments. You cannot just decide to leave a prepayment unpaid because you are no longer receiving rent.
At the latest, the rental income actually received must be reported on the pre-completed tax return to be submitted in spring the following year. The same goes for claiming any deductions for expenses.
See guidance for filing and payment
If the house or apartment is left unoccupied for a few months every year, you need to declare the amount of rent, and claim deductions for your expenses, only for the months when it is rented out.
However, if the house’s or apartment’s purpose of use is rental property, for the entire year, you are entitled to claim deductions for expenses also for the periods when you are having no tenant. The reasons for those periods may be a renovation project or a situation where your previous tenant moved away and you are looking for a new tenant. The tax authority may require that you present a photocopy of a “for rent” advertisement or of a contract signed with a rental agent. This is evidence that the house’s or apartment’s purpose of use is rental property.
If you move in to live in that house/apartment, the purpose is changed, and you can claim tax-deductions only for the period when you had a tenant. A typical example of the expenses to deduct is the monthly charge for common housing-company expenses. Correspondingly, you may have paid interest on a loan. For the interest expense, you can claim tax-deductions only for the period when you had a tenant. However, if you pay interest on a home mortgage loan for the house or apartment where you are living in, the interest expense is nondeductible.
The tax year for rental income reporting is the year when your rental income actually has arrived to you. When you receive “back rent”, e.g. the tenant pays you the owed rent for both November and December in January, you need to declare the amount you receive in January as income of the new tax year that started in January.
If you need to begin rent collection with the help of a lawyer, tax-deductions are available for the legal expenses and fees for court proceedings arising from the recovery of your rental income, termination of the contract, eviction of the tenant.
If your tenant caused property damage when living there or when leaving, either to the house/apartment itself or to its furniture and fittings, tax-deductions are available for the repair expenses. However, no deductions are available if your tenant pays you reimbursement for the property damage caused.
In general, the tax authority will treat your rental income as income from capital, received personally by an individual taxpayer, and the usual reporting of this income is using the individuals’ pre-completed tax return. When you rent out apartments or units of real estate under rental contracts made out for the long term, you receive capital income from a personal source of income – even if there were many rental properties. Not only the long-term rental but also short-term rental contracts are treated as personal sources of capital income.
When would my rental operation be seen as a business?
From a tax point of view, expansion of an economic activity can make it seen as a business. Some legal markers of a business operation:
If you rent out just one item of property with rental contracts only for a short term, the general conclusion would be that your rental operation is not a business. Other examples of a nonbusiness activity: you live in your own house or apartment but you rent it out to someone from time to time, or you rent out a room, or you own a camper van – or comparable property – and you agree to rent it out.
Conversely, the following are examples of a business operation:
When you are an individual taxpayer – you do not conduct business – and you offer one or more apartments or other property for rent, no VAT needs to be paid for the rental income you receive.
If the rental operation is a business, and you receive more than €20,000 a year of turnover (net revenue from sales), you need to submit an application for VAT registration.