Rental Property Income

[jimeve]

29 minutes ago, hk blues said:

The form was updated a few days ago and is much simpler now - only 2 pages.  

What system is your wife using  - the tax tables or the 8%?  Does your wife also pay the 3% percentage tax quarterly?

Wife pays 3% tax quarterly. Don't know which system she uses!  I think I'm getting that mixed up with income tax

Edited February 1, 2019 by jimeve

[OnMyWay]

1 hour ago, jimeve said:

Financial Information for Residential Property Buyers. from the same page at the top. The one at the bottom of the page is for non-residence.

The very first chart at the top in the Tax Example: Rent says "Non-resident couple's joint monthly rental income".

It is dated Nov. 2017 so it is not updated with TRAIN changes, and that is evident in the VAT section.

[hk blues]

7 hours ago, jimeve said:

Wife pays 3% tax quarterly. Don't know which system she uses!  I think I'm getting that mixed up with income tax

It's a confusing system.  I pay (well, paid) both the 3% and Income Tax but as of 1st Jan I opted for the 8% rate so no more 3%.  It may be worthwhile your wife doing the same.  

[jimeve]

12 hours ago, hk blues said:

It's a confusing system.  I pay (well, paid) both the 3% and Income Tax but as of 1st Jan I opted for the 8% rate so no more 3%.  It may be worthwhile your wife doing the same.  

So what's the 3% for? Both wife and I are new to this and confused. She's not paid any other money out but that could be because her income is less than 250,000.

[OnMyWay]

1 hour ago, jimeve said:

So what's the 3% for? Both wife and I are new to this and confused. She's not paid any other money out but that could be because her income is less than 250,000.

I think I might understand it after looking at this BIR FAQ page.  Look at #10.  I think your wife would be under B., "Taxpayers source of income is purely from self-employment".

https://www.bir.gov.ph/index.php/tax-information/income-tax.html#faqs

Similar to the U.S., I think the quarterly payment is estimated tax.  Then at the end of the year, you file your return.  Question is, you wife should not pay any tax because it is less than 250k, so do they give refunds?

[fillipino_wannabe]

On 2/1/2019 at 12:26 PM, OnMyWay said:

I don't that is correct.  VAT is not applied for business' under p3 mil.  You would need a lot of units to reach that much, or one unit renting for p250,000 per month.  The threshold used to be p1,900,000 until last year and was changed as part of TRAIN.

https://www.bir.gov.ph/index.php/tax-information/value-added-tax.html

Who are Required to File VAT Returns?

Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed Three Million Pesos (Php3,000,000.00)

A person required to register as VAT taxpayer but failed to register

Any person, whether or not made in the course of his trade or business, who imports goods

Yeah you're right, my mistake. Read an article that said over 15k charges VAT, didn't mention the threshold lol.

You should be good then.

Edited February 2, 2019 by fillipino_wannabe

[sonjack2847]

This is a very good topic and it makes people think of other things thanks OMW.

[hk blues]

On 2/2/2019 at 9:45 AM, jimeve said:

So what's the 3% for? Both wife and I are new to this and confused. She's not paid any other money out but that could be because her income is less than 250,000.

IF your wife is taxed in the same way as me, there are 4 payments required.  By the end of January each year a payment of 500php is required for annual registration through form 0605.  Each quarter 3% of Gross Income is required to be paid through form 2551Q.  Each quarter income tax is payable according to the tax tables through form 1701Q.  Finally,  by each April 15 a final payment of income tax for the previous year is required (Total for the year minus what was paid each quarter in 1701Q) - this is using form 1701A. 

However, from 2018 we can choose a different tax rate - 8% of Gross Income minus 250K.  Payable quarterly through 1701Q - not 3% required if this option is chosen.

Even if we earn less than 250K we need to pay the 3% unless we chose the 8% option.

Again, this is my situation and your wife's may be different.  I'd check with local BIR.

[hk blues]

On 2/2/2019 at 11:35 AM, OnMyWay said:

I think I might understand it after looking at this BIR FAQ page.  Look at #10.  I think your wife would be under B., "Taxpayers source of income is purely from self-employment".

https://www.bir.gov.ph/index.php/tax-information/income-tax.html#faqs

Similar to the U.S., I think the quarterly payment is estimated tax.  Then at the end of the year, you file your return.  Question is, you wife should not pay any tax because it is less than 250k, so do they give refunds?

The quarterly payment is estimated and the Annual return corrects everything. 

It's not quite correct that income of less than 250K means no tax - no income tax but quarterly percentage tax of 3% is still required to be paid.

Refunds - hmm.  No cash refunds given (surprise, surprise) but tax credit given to deduct against future taxes (if you have any) BUT i''ve been waiting a year for my 2017 Tax Credit so...