Income tax on rent, worked example, in Philippines
| Non-resident couple's joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less: Expenses3 | 90% | 16,200 | 64,800 | 129,600 |
| = Taxable Income | 1,800 | 7,200 | 14,400 | |
| Income Tax Rates4 | ||||
| Up to PHP10,000 | 5% | 20 | 20 | 20 |
| PHP10,000 - PHP30,000 | 10% | 80 | 80 | 80 |
| PHP30,000 - PHP70,000 | 15% | 90 | 240 | 240 |
| PHP70,000 - PHP140,000 | 20% | - | 560 | 560 |
| PHP140,000 - PHP250,000 | 25% | - | 400 | 1,100 |
| PHP250,000 - PHP500,000 | 30% | - | - | 1,320 |
| Over PHP500,000 | 32% | - | - | - |
| Annual Income Tax Due | 190 | 1,300 | 3,320 | |
| Other Taxes | ||||
| Value Added Tax (VAT)5 | 12% | 540 | 8,640 | 17,280 |
| Tax Due as % of Gross Income | 4.06% | 13.81% | 14.31% | |
Thanks to: |
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Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 50.00 PHP
3 Estimated values. Income-generating expenses are deductible when calculating taxable income. Typical deductions are repairs and maintenance, depreciation, and taxes and licenses.
4 Rental income earned by nonresident individuals is taxed at progressive income tax rates.
INCOME TAX |
|
| TAXABLE INCOME, PHP (US$) | TAX RATE |
| Up to 10,000 (US$200) | 5% |
| 10,000 - 30,000 (US$600) | 10% on band over US$200 |
| 30,000 - 70,000 (US$1,400) | 15% on band over US$600 |
| 70,000 - 140,000 (US$2,800) | 20% on band over US$1,400 |
| 140,000 - 250,000 (US$5,000) | 25% on band over US$2,800 |
| 250,000 - 500,000 (US$10,870) | 30% on band over US$5,000 |
| Over 500,000 (US$10,000) | 32% on all income over US$10,000 |
| 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%.
