How to rent and rent real estate if you are an entrepreneur

How to let and rent property

The rules for leasing real estate for entrepreneurs on a simplified and general system are different. On the general system, you can rent as many square meters as you like, and the status of the tenant does not matter. But there are restrictions on the single tax.

In addition, on the general system, you can reduce your taxable income by the amount of expenses that you have for the rental object, for example, considerable utility bills, if it is written in the contract that the tenant reimburses you. This is especially true for sole proprietorships that sublease real estate. Their income will be the rent they receive, and their expenses will be the rent paid.

Documents confirming rental income

In case of a tax audit, you should have available: a lease agreement or a sublease agreement, signed certificates of acceptance and transfer of premises and certificates for the provision of rental services.

If you receive payment in cash, be sure to draw up a document on receipt of money, indicate in it the amount of the lease payment, the date. If you receive money on a business account – an account statement.

And of course, if you rent out real estate as an FLP, you should receive money to a business account, and not to an individual’s card.

You are not required to notify the tax office that you are renting out property. But if you conclude a lease agreement for 3 years or more, you need to certify it with a notary and carry out state registration

In order for an FLP-general system worker to confirm expenses, there must be contracts with public utilities (for electricity, natural gas, heat, water, etc.), in which you act as an FLP, and not as an individual owner of real estate; payment documents, acts of acceptance and transfer of services.

If you are renting a property as an individual

To rent a property, you do not need to register as an entrepreneur. True, you will have to pay taxes on rent payments. Individual landlords, like FLPs, pay taxes and report their income.

Entrepreneur leases premises for business from an individual

An entrepreneur who rents premises or land from an ordinary individual and pays him money becomes his tax agent. Rent is the income of an individual, and you are required to withhold and pay to the budget from rent payments

You do not need to pay ERUs when paying money for rent to an individual, because rent is not the performance of work or the provision of services for which a fee is charged.

For the calculation of personal income tax, the amount of the lease payment prescribed in the contract is taken. Local councils may set a minimum rental price per square meter. m of the total real estate area of individuals, they must make a decision about this and publish it on their websites before the start of the reporting (tax) year. If there is such a solution, the basis for calculating personal income tax must be at least the minimum amount. And if the minimum cost is not set, then the tax is calculated from the amount of the rent specified in the contract