Income Tax (Rental Income) — Key Overview
A practical guide to reporting and calculating rental income for individuals (general cases and government-supported rental programs).
1) Definition & Legal Basis
- Rental income received by an individual from leasing a house or apartment is classified as rental income under individual income tax.
- Governed by Article 14, Paragraph 1, Item 5 of the Income Tax Act and relevant regulations issued by the Ministry of Finance.
2) Filing Principles
- Filed through annual settlement: reported in the May individual income tax filing of the following year.
- Rental income = Annual gross rent − Necessary expenses and depreciation (standard deduction or itemized deduction).
3) Calculation Methods
Method A | Standard Expense Deduction (No Receipts)
- General case: 43% of rental income is deemed necessary expenses; the remaining 57% is taxable rental income.
Method B | Itemized Expenses (With Receipts)
- Deductible expenses with documentation include: repairs, management fees, house tax, land value tax, insurance premiums, and mortgage interest (subject to regulations).
- If actual expenses exceed the 43% standard, itemization is usually more tax-efficient.
4) Policy-Based Rentals (Tax-Free Allowances / Higher Expense Rates)
For rentals qualifying under government housing programs, income exceeding the tax-free allowance may apply higher standard expense rates:
| Program | Monthly Tax-Free Allowance (per unit) | Standard Expense Rate for Excess Amount |
|---|---|---|
| Leased to tenants receiving government rent subsidies | NT$15,000 | No receipts: 43% |
| Used as social housing (leased by the government) | NT$15,000 | No receipts: 60% |
| Subleased via property management or master-lease operators (residential use ≥ 1 year) | NT$6,000 | No receipts: 53% for the portion exceeding NT$6,000 up to NT$20,000 per month; 43% for the portion exceeding NT$20,000 |
The above is based on announcements by the Ministry of Finance and the tax portal. Eligibility thresholds, documentation, and applicable periods are subject to the latest official notices.
5) Examples
- General rental: Annual rent NT$300,000 → Taxable rental income ≈ 300,000 × 57% = NT$171,000
- Managed rental example: Monthly rent NT$23,000. The portion from NT$6,000 to NT$20,000 (NT$14,000) uses a 53% expense rate; the portion above NT$20,000 (NT$3,000) uses a 43% expense rate. Annual taxable income is calculated after aggregation.
6) Practical Notes for Brokers
- Advise landlords to truthfully report rental income; underreporting may result in back taxes and penalties.
- Help landlords evaluate whether the 43% standard or itemized method is more advantageous, and retain supporting documents.
- Lease agreements should not restrict tenants from claiming rental expense deductions, to avoid regulatory violations.
- When renting to companies or institutions, pay attention to withholding tax and supplementary NHI premiums.