Income tax on rent, worked example, in Puerto Rico
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| ELECTING TO TREAT RENTAL INCOME AS INCOME EFFECTIVELY CONNECTED WITH BUSINESS | ||||
| Non-resident couple´s joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less Expenses3 | 25% | 4,500 | 18,000 | 36,000 |
| = Taxable Income | 13,500 | 54,000 | 108,000 | |
| Income Tax Rates4 | ||||
| Up to US$ 9,000 | 0% | - | - | - |
| US$9,000 - US$ 25,000 | 7% | 315 | 1,120 | 1,120 |
| US$25,000 - US$ 41,500 | 14% | - | 2,310 | 2,310 |
| US$41,500 - US$ 61,500 | 25% | - | 3,125 | 5,000 |
| Over US$ 61,500 | 33% | - | - | 15,345 |
| Annual Income Tax Due | 315 | 6,555 | 23,775 | |
| Tax Due as % of Gross Income | 1.75% | 9.10% | 16.51% | |
| Source: Global Property Guide research |
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Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 1.00 USD
3 Estimated values. Income-generating expenses are deductible when calculating taxable income.
4 Rental income earned by nonresident individuals is taxed at progressive rates.
| NOT ELECTING TO TREAT RENTAL INCOME AS INCOME EFFECTIVELY CONNECTED WITH BUSINESS | ||||
| 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 Rates2 | ||||
| Flat Rate | 29% | 5,220 | 20,880 | 41,760 |
| Annual Income Tax Due | US$5,220 | US$20,880 | US$41,760 | |
| Tax Due as % of Gross Income | 29% | 29% | 29% | |
Thanks to: |
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Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 1.00 USD
3 Estimated values. Income-generating expenses are deductible when calculating taxable income.
4 Rental income earned by nonresident individuals is taxed at a flat rate of 29%.
