How much extra taxes do landlords need to pay for rent if reporting income?

Taiwan Living in Taiwan
1

I need to negotiate for my landlord to allow me to register my home as an office for my business (it’s allowed, because it’s a mixed use office/residential building). My landlord isn’t paying taxes on rent (it says on the rental contract).

What’s a reasonable extra amount to negotiate with in order to allow me to list the address for my business? 10%? 20%?

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2

Do you have an accountant?

3

Depends on the value of the property and property tax rate of the region, if the landlord has reported the property as self occupied

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4

I do! I can ask them tomorrow, maybe they can draft a letter to the landlord. However anything more than 10% raise in rent and I’d be better off renting a co-working space as an office.

5

Yeah, they should know all the ins and outs.

6

There is also the off chance they havent paid taxes on the house/land in years. Im not sure how it works but i could see it being possible that might be needing to be cleared before allowing business registration. Just a thought aside from the obvious tax elevation in business. When i rented a house we paid the land lord 3k a year extra for their raised tax. It isnt much, but dont bother setting up fake rentals in an expensive area…

7

In future whenever you rent an apartment ask the Agent is this location or area is under business so you can register and ask the Landlord for help. Must discuss before renting any apartment or else the Landlord are very tricky over here - that’s what I have learned a lesson

8

Sometimes you can force the landlord’s hand…

Like make enough noise for someone to complain and then the tax authorities will send you a letter making you register… then the landlord will have no choice.

That’s how I got my place in shilin registered as a business…

9

Why do landlords think that paying tax on income is optional? I guess paying tax on my salary is optional too.

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10

Because no one checking - it’s self-reported income. So little chance of getting caught.

Also everyone else is doing it.

11

Gotta start a lottery payout system when you pay your rent.

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12

Obvious solution is a government mandate that says Taiwanese citizens have to move their household registration to where they’re actually living.

This rule exists for foreigners - we have to keep our ARC address updated or risk a fine. But it’s optional for Taiwanese citizens, so most don’t do it.

13

The extra taxes the landlords need to pay if reporting it as a business rental:

  1. House tax: if it’s owner-occupied, the tax rate is 1.2% of the government-assessed value of the building. If it’s a business, it’s 3%-5%. They have to report the change of status for the building, so it’s extra work for them.
  2. Income tax: The landlord can choose to itemize some allowed expenses from the rental income as deductibles, or they can deduct 43% of the rental income. How much extra they need to pay of course depends on their marginal tax rate. Keep in mind this is extra work for them too.
  3. If your rent is NT$20,000/month or more, and the landlord is a natural person, then you are responsible for the 10% tax withhold and 2.11% NHI supplementary premium of the rent. There is a calculator here:
    租賃扣繳及二代健保試算 - 新平稅務記帳士事務所｜您公司行號登記與記帳稅務的得力助手

I bet most landlords would not do it for a mere 10% rent increase.

Just curious, @jimbob132, did your end up going this route? If so, what percentage was the rent increase?

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14

A previous landlord allowed us to pay tax in order to move household registration. However, the taxable rent amount was less than half of the actual rent we were paying them in cash.

I guess this was top minimize tax burden? Similar to how cram schools always have 2 contracts (fake one for the government, real one for the employee).