Personal income tax return on income derived from the lease of property

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Income Tax Act (ZDoh-2) III. Chapter 5 regulates income from renting out property and income from the transfer of property rights. The provisions of this chapter do not affect the taxpayer’s tax liability under III.3. chapter governing Income from activities.

Property rental income is defined as income obtained by renting out real estate and movable property. In this case, any rental of property based on a contract or on another legal basis is considered to be a rental of property by which the lessor allows the lessee certain property to use or the right to use the property, and the lessee is obliged to pay him rent or other compensation for this. The most common property leasing transactions are: lease, sublease and mutual leasing of property.

From 1 January 2023, income from renting out property is taxed at a flat rate of 25 % (in 2022 at 15 %, in 2020 and 2021 at 27.5 % and before that at 25 %) of the tax base and it is not included in the annual tax base for assessing income tax on an annual basis.

The tax base is the achieved income, which from 1 January 2022 is reduced by standardized costs in the amount of 10% (in the years 2020 and 2021 in the amount of 15% and before that in the amount of 10%) of the achieved income. Instead of standardized costs, the taxpayer can claim the actual costs of property maintenance. However, neither standardized costs nor actual costs are recognized if the income is obtained by renting out agricultural land, forest land or on the basis of subletting.

The income tax thus paid is considered a final tax.

Income from the transfer of a property right is considered to be the income achieved by the owner of the property right, so that:

  • – cedes use or exploitation or
  • – assigns the right to use or the right to exploit material copyright and material rights of the contractor, invention, product appearance, distinguishing mark, technical improvement, plan, formula, process, similar right or similar property and information regarding industrial, commercial or scientific experience, not depending on whether they are protected by law, personal name, pseudonym or image.

Income from the transfer of property rights is taxed at a tax rate of 25% of the tax base. The tax base is the achieved income, which is reduced by normalized costs in the amount of 10% of the achieved income.

Standardized costs are not recognized:

  • – to the holder of a property right who is not an author, performer, inventor or other person who creates an object of property right,
  • – in case of assignment of use or exploitation or assignment of the right to use or the right to exploit a personal name, pseudonym or image.

This income, unlike the income from renting out property, is included in the annual tax base for the assessment of income tax on an annual basis.

Download the form – Personal income tax return on income derived from the lease of property