17-08-2009 / Summer Boom

This summer has been seeing unusual activity within the lettings market as the authorities became concerned about the legal status of lease business. Unofficial deals, rental rate understatement for tax inspection, and absence of properly executed documents – these are just a few offences mentioned by the President at his meeting with Yedinaya Rossiya members.

Thus, PENNY LANE REALTY experts have prepared bit-by-bit instruction for preparing the apartment for official leasing to eliminate possible problems such as dishonest tenant, fraudulent practices of fly-by-night companies or tough talk with the tax inspector.

Preparation

-Prior to preparing the apartment it is a good idea to address a consultant for cost optimization. The more thoroughly the apartment is prepared, the less time it will take to lease it out, the more up-market it will be and the higher the social position of the tenant will be.

Viewing

-During the viewings take reasonable care; do not trust questionable though seemingly profitable offers by accidental agents. It is better to contact qualified professional companies, with long-lasting history of operating in lease market and staff of experienced lawyers and brokers capable of protecting the client’s interests.

The Deal

-Study each and every article when preparing the lease contract. Make changes in the contract form if necessary as every contract is individual and the parties to it have the right to put it in the paper. Pay attention to complete and proper completion of all the papers.

Taxes

-The last but very important part is rental income declaration and taxpaying (personal income tax). The tax rate is 13 per cent. The income-tax return is filed before April, 1 each year together with the lease agreement copy to the Tax office at place of residence.

The tax can be legally decreased to 6 per cent. For this one needs to register as an individual entrepreneur and change to the simplified taxation system. The registration takes up to five days after the documents are submitted.

Paying taxes will make the landlord more confident if the tenant breaks the contract. Usually if the apartment is leased out unofficially the landlord becomes the prisoner of the situation when he or she during the trial can be found out not to be paying taxes.

If one follows the above mentioned recommendations, their rental business will make them only profit and not problems like financial losses and emotional distress from third-party agents, lessees and tax authorities.

 

Penny Lane Realty can be addressed for any consulting legal advice by companies and natural persons in the area of rental or lease taxation.