Before the real estate tax came, it came first
Living in a big city, renting a house is a normal thing, but have you ever heard of renting a house with taxes? Generally speaking, we think that renting is only a transaction between the landlord and the tenant, and once the house is established, then the lease is concluded, sometimes even orally, and then even after the lease has been completed。
In fact, this is not the case, as a tax on rental housing was introduced in 2012 and has been piloted in cities such as shanghai, shenzhen, shenyang and hangzhou. However, after the landlord rents the house, it is necessary to register it with the housing authority and to pay a certain amount of tax to the tax administration, many of which, in their own interest, are largely reluctant to declare themselves. In addition, while the rental tax should be paid by the landlord, in practice the landlord tends to shift this burden to the tenant. As a result, the rental tax, though an “old tax”, is so low in the conventional market that it is ignored。
However, the recently issued bulletin on matters pertaining to the administration of personal income tax on individual rented housing issued by the revenue department of hebei province has again brought the topic of “landlord tax” to a new height. The bulletin states that, as of 1 october, individual rental (sub-lease) housing could not provide a legal and accurate cost certificate, that it could not accurately calculate the cost of rental housing, and that the amount of taxable income was approved within a range of 5 to 10 per cent of rental income。
According to the bulletin, if the landlord is unable to provide the relevant rental certificate, income tax is levied at 5-10 per cent as of 1 october of this year. According to the previous rental tax, the main elements of the tax are turnover tax, property tax and personal income tax. Of these, the turnover tax rate is 5 per cent of rental income, 4 per cent of property tax, and 10 per cent of taxable income is personal income tax. If the monthly income does not exceed $4,000, the taxable income is reduced by $800, after deduction of taxes and charges for rental of housing。
In the case of rent of $3,000 per month, we can calculate the following: turnover tax of $150; property tax of $120; and personal income tax of $193. Thus, combined, the rental tax was $463, of which the personal income tax was 6. 4 per cent. According to the bulletin above, if the landlord is unable to provide a certificate, income tax is levied at a rate of 5-10 per cent, and 6. 4 per cent of income tax is within this range. In the view of the authors, this amounts to a combined tax rate, saving many complex elements and, to some extent, circumventing the possibility of landlords not paying taxes on time。
So what is the impact of the policy
1 the possibility that landlords may transfer them to tenants is not excluded. The rental tax is an “old tax” but has long been scarcely mentioned, both by renters and landlords. A friend told the writer that the first thing to do after tax is to ensure that the landlord does not lose his own income, and if it does, it would be logical to transfer the tax to the tenant, which should be the mindset of the vast majority of landlords. From the tenant's point of view, it is precisely this that is realized, and naturally it is not willing to bear the additional burden, unless the rent costs are reimbursed and the landlord is asked to issue the relevant invoices, which is not mentioned, so it is a long-standing reality。
To some extent, this means that the term “rent loan” will slowly become the past. Pan suk-soo had suggested that the normal rental rate of return should be between 1 and 2 per cent for bank loans, such as 5 per cent for bank loans, and 6 or 7 per cent for rent. The reality, however, is that in many large cities the return on rent is only 1 per cent, and even if the rent is doubled, it remains at a loss. Not unique, according to zhuge's data on house search, the return on rent in each of the country's four largest cities is below 2 per cent. According to the writer, the higher the urban class, the lower the rent return。
We take the example of a 2 million house: assuming a return on rent of 2 per cent, it would take almost 50 years to get it back in full. It is clear that rental rates of return are already relatively low and that, in addition to being passed on to tenants, the imposition of a certain amount of tax would, to a greater or lesser extent, have an impact on landlords' incentives to rent, particularly to discourage investors from “rent loans”。
3. In order to curb the increase in the price of housing, the owners of multiple units (this category) may face a dilemma. The low return on rent and the possibility of imposing a “landlord tax” may cause many landlords to give up their rent, so does the house fall on their hands? Obviously not. After all, renters don ' t expect renting houses to make money, but rather to be rich through the space of rising housing prices. Thus, for the vast majority of those who are hoarded, the increase in housing prices is more important, which is more expensive than renting houses and does not pay the so-called landlord tax。
It is good to think, and it has been true in the past few years, but in the current state of the market, speculation is not going to work, even if more houses are being hoarded, so long as the price of the house does not rise, but rather increases its own cost of holding. In the long run, with the introduction of real estate taxes, vacant taxes and other measures, the fact that the house is empty and the rental of the house is more taxable, and that the owners of multiple apartments are undoubtedly facing a dilemma, does require a change in the concept of buying a house. In addition, the authors believe that a combination of landlord tax and other tax policies that act as a combination of boxing can discourage speculation and thus discourage increases in home prices。
4. The future or potential to be a stable source of fiscal revenues. According to statistics, our rental population now stands at 190 million and the rental market is about 1. 3 trillion yuan. In addition, a number of experts in the industry have repeatedly indicated that as urbanization continues, more than 200 million people will still enter large cities in the future. It is clear that there will be considerable room for future developments in the rental market in our country. In the last two or three years, the country has also been promoting a shift from a market system dominated by commodity houses to rentals. To date, 16 cities, such as beijing, shanghai, chengdu, nanjing, hangzhou, hoi fat, fuzhou, xiemen, zinan, zhengzhou, wuhan, changsha, guangzhou, shenzhen, chongqing and changchun, among others, have entered the pilot project。
Thus, according to the authors, the future real estate market, the rental of housing, or even the leading actors, will gradually emerge, so that tax and legal policies aimed at the rental market will continue to evolve. Indeed, a “tenant tax” may, to some extent, not only discourage speculative hoarding, but may also gradually replace land revenues, which together with taxes on real estate, vacant taxes, etc., are a stable source of fiscal revenue, not only because it involves nearly 200 million people, but also because land revenues are not sustainable. Taken together, these two effects suggest that, after hebei, more cities may follow suit in the future。
Finally, in response to the concern that “the tax will be passed on to the tenant”, the author believes that, as the leasing market develops, the state will certainly make it clear, inter alia, by law, so that there is little to worry about. Nevertheless, we should also bear in mind that in the process of renting a dwelling, we should be proactive in specifying in the contract the rights and obligations of ourselves and the landlord, so as to avoid problems and reduce unnecessary trouble ahead of time. So, how do you see the policy coming about? Welcome to the discussion。
