Property Tax Guide for Landlords

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Q1: What is property tax? Who needs to pay it?

Property tax applies to landlords who own rental properties and is levied based on their rental income. If the property is for self-use, the landlord does not need to pay property tax, only other tax liabilities.

Q2: How is property tax calculated?

The standard property tax rate is 15%, calculated based on the annual net rental income. Net rental income refers to:

• Deducting 5% rates
• Deducting unrecoverable rent (if applicable)
• Automatically deducting 20% standard repair allowance (no need to submit additional expense proof)

Calculation example (assuming a monthly rent of $10,000):

• Annual rental income: $10,000 × 12 = $120,000
• Deduct 5% rates: $120,000 - $6,000 = $114,000
• Assuming no bad debt: remains $114,000
• Deduct 20% standard repair allowance: $114,000 × 80% = $91,200
• Property tax payable: $91,200 × 15% = $13,680

Q3: What should landlords do regarding tax reporting if tenants default on rent payments?

Landlords are still required to report the receivable rent. However, if the tenant confirms inability to pay, the landlord can apply to the tax bureau for a deduction of that portion of the amount.

Q4: How to reduce property tax burden?

Opting for "Personal Assessment" allows you to enjoy mortgage interest deduction, potentially reducing tax expenses compared to directly paying property tax. The tax bureau will calculate in the most favorable way for taxpayers, without causing additional tax burden.

Q5: What tax deductions are available for owner-occupiers?

If the property is for self-use, you can apply for "Home Loan Interest Deduction", for up to 20 tax years, which do not need to be consecutive.

• Annual deduction limit: $100,000 (an additional $20,000 deduction will be added starting from the 2024/25 tax year)
• Suggested strategy: Apply during interest rate hike cycles to maximize interest relief.

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