A fairly high percentage of citizens of the Russian Federation owns more than one apartment, preferring to lease additional real estate. In this regard, there is often a misunderstanding about whether the activity is subject to taxes.
Do I need to pay tax for the provision of lease
As Article 208 of the Tax Code of the Russian Federation states, income received from the lease of any property on the territory of the country (both by individuals and legal entities) is taxed. At the same time, the owner providing the relevant service does not have to register as a legal entity or an individual entrepreneur.
According to Article 2 of the Civil Code of the Russian Federation, activities that are interpreted as entrepreneurial should be related to risk and be aimed at systematic profit. From a legal point of view, the provision of private property for rent cannot be called a risky activity, therefore, further one should be guided by Article 606 of the Civil Code of the Russian Federation. The latter includes the procedure for drawing up a lease agreement, in accordance with which a citizen is responsible before the law as an individual.
The conclusion of a lease agreement is a mandatory procedure when transferring private property for use to another person, giving both parties certain rights and powers that they are obliged to observe and perform. The absence of a signed agreement may lead to the fact that the lessor will be brought to administrative or criminal liability for violation of the relevant requirement and illegal evasion of taxes on personal income.
How to pay taxes on rental income
The fixed income tax of individuals in the Russian Federation is 13 percent. Owners of apartments operating under a lease agreement must annually fill out and submit an income declaration to the tax authority at their place of residence. This document is drawn up in the form of 3-NDFL. The declaration should be submitted at the end of the calendar year during which the income from the rental of the apartment was received. The deadline for the procedure is April 30 of the year following the reporting year.
Currently, it is possible to quickly fill out the declaration through a special application available for downloading to a computer from the official website of the Federal Tax Service. The completed document should be printed on a printer. In addition, on the FTS website, you can find out the address of a suitable tax office (by TIN or passport data) and make an appointment at a certain time.
In addition to the declaration, you do not need to submit any other documents. It is advisable to keep the original file as it may need to be edited and re-submitted if tax officials discover errors or inconsistencies. Then you should wait for the receipt to the taxpayer's mailing address with the details and the amount to pay the income tax. If the relevant details are known and the declaration is completed without errors, you can pay the tax in advance yourself.
What happens if you do not pay taxes
Evasion of income tax is a serious violation for which a citizen can be brought to administrative or criminal liability. In the first case, a warning is issued as a punishment, and a fine is imposed, in accordance with the current legislation. If the fact of tax evasion is repeatedly revealed, or an especially large amount was hidden, a criminal case is initiated, which may threaten with detention.
Citizens who act without concluding a lease agreement are in the zone of particular risk: this fact can be detected during any inspection of the residents of the apartment by law enforcement agencies or representatives of the housing office. However, even simple tax evasion is often detected on a tip from citizens living in neighboring apartments, or on a request from the tax service. Thus, the payment of income tax when renting an apartment is a strict obligation of every owner.
