Income tax on rent, worked example, in Philippines
| Non-resident couple´s joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less: Expenses3 | 50% | 9,000 | 36,000 | 72,000 |
| = Taxable Income | 9,000 | 36,000 | 72,000 | |
| Income Tax Rates4 | ||||
| Up to PHP250,000 | 0% | - | - | - |
| PHP250,000 - PHP 400,000 | 20% | 200 | 1,200 | 1,200 |
| PHP400,000 - PHP 800,000 | 25% | - | 4,000 | 4,000 |
| PHP800,000 - PHP 2,000,000 | 30% | - | 1,000 | 12,000 |
| PHP2,000,000 - PHP 8,000,000 | 32% | - | - | - |
| Over PHP 8,000,000 | 35% | - | - | - |
| Annual Income Tax Due | 200 | 6,200 | 17,200 | |
| Other Taxes | ||||
| Value Added Tax (VAT)5 | 12% | 540 | 8,640 | 17,280 |
| Tax Due as % of Gross Income | 1.89% | 20.61 | 23.84% | |
Thanks to: |
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Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 50.00 PHP
3 Estimated values. Income-generating expenses are deductible when calculating taxable income. Typical deductions are repairs and maintenance, depreciation, and taxes and licenses.
4 Rental income earned by nonresident individuals is taxed at progressive income tax rates.
INCOME TAX |
|
| TAXABLE INCOME, PHP (US$) | TAX RATE |
| Up to 250,000 (US$ 5,000 ) | 0% |
| 250,000 - 400,000 (US$ 8,000 ) | 20% on band over US$ 5,000 |
| 400,000 - 800,000 (US$ 16,000 ) | 25% on band over US$ 8,000 |
| 800,000 - 2,000,000 (US$ 40,000 ) | 30% on band over US$ 16,000 |
| 8,000,000 - 8,000,000 (US$ 160,000 ) | 32% on band over US$ 40,000 |
| Over 8,000,000 (US$ 160,000 ) | 35% on all income over US$ 160,000 |
| Source: Global Property Guide | |
5 A 12% Value Added Tax (VAT) is imposed on residential property leases that
satisfy certain conditions. The VAT burden is generally shouldered
by the tenants.
Properties with rental payments exceeding PHP12,800 (US$272) per
month received by landlords whose gross annual rental income exceed
PHP1,919,500 (US$40,840) are subject to 12% VAT.
Properties with rental payments exceeding PHP12,800 (US$272) per
month received by landlords whose gross annual rental income does
not exceed PHP1,919,500 (US$40,840) are not subject to 12% VAT.
Instead, it will be liable for percentage tax at a flat rate of 3%
levied on the gross rent.
Non-Resident Couple (Through a Local Corporation):
| Non-resident couple´s joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| = Taxable Income | 18,000 | 72,000 | 144,000 | |
| Income Tax 3 | ||||
| Flat rate | 25% | 4,500 | 18,000 | 36,000 |
| Annual Income Tax Due | 4,500 | 18,000 | 36,000 | |
| Tax Due as % of Gross Income | 25.00% | 25.00% | 25.00% | |
| Thanks to: |
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Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 50.00 PHP
3 Rental income earned by nonresident individuals is taxed at a flat rate of 25%.
