How is rental income taxed?
Rental income counts as taxable income. What is taxed is the surplus, that is the rent less the deductible costs.
Income from letting a property is taxable in Austria. What is taxed, however, is not the whole rent but the surplus: the income less the costs connected with the letting. This surplus goes into your income tax return.
What counts as income
Rental income includes the rent received and, as a rule, operating costs passed on. From this income the taxable surplus is determined by deducting the allowable expenditure.
What you can offset
Many ongoing costs reduce the taxable surplus. These typically include expenditure on management, maintenance, certain financing costs and depreciation of the building. Which items apply in your case is set out in Which costs can I claim as a landlord?.
Depreciation
Part of the acquisition or construction costs of the building can be claimed over the years. That is an important lever which is often underestimated.
Clean records
Anyone who documents income and expenditure cleanly makes the tax return easier and uses every deduction available. That is exactly where we take the load off you with traceable management.
It is not the rent that is taxed, but what is left at the end. Good records decide the amount.
When letting becomes interesting for tax
Particularly in the first years of a letting, the deductible costs often exceed the income, for instance through financing and refurbishment. The taxable surplus can then be small or even negative. Over the years the picture usually turns, because loans are repaid and income rises. Anyone who keeps an eye on this development plans their letting ahead and avoids surprises. We provide you with clear figures on income and costs on an ongoing basis, so that you and your tax adviser always know where things stand and can react in good time.
How we support you
As your manager we provide clear statements and orderly record-keeping, so that your tax return goes smoothly. The tax filing itself you settle with your tax adviser. What a property manager does overall is set out here. Talk to us if you would like to put your letting on a more efficient footing.