BUSINESS NEWS - In preparation for tax season, taxpayers can start gathering all the supporting documents that are needed to submit their tax returns.
The first important point to note when reviewing the income tax implications of residential properties is the difference between; the income tax of primary residences and buy to let residential properties:
Primary residences are occupied by the owner of the property and there is therefore no taxable income that is generated from the ownership of the property.
All the costs that are incurred in relation to the property are therefore of a personal nature and cannot be deducted for income tax purposes.
Rental properties are leased by a tenant and the owner of the property (the lessor) receives a monthly rental income in return for leasing the property. The rent income must be included in the taxable income of the property owner regardless of whether the property owner is an individual, corporate entity or a trust.
All the costs that are incurred in order to generate a monthly rental income can be deducted from the income that the property owner receives when calculating the owner’s taxable income for tax assessment purposes.
