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Rental income, tax

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Posts: 407
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(@aspidistra)
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Hi all

I understand repairs on a property can be offset against rental income that you might get from the property.

My question is, if you do a lot of repairs/renovation before you start renting out, but in the same tax year, can you claim that back against your taxable income?

I know in the UK you can only claim repairs from the time you are renting the property out.

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(@tygger)
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Aspidistra

As Thomas says you really need to speak with an accountant, you're going to need on to provide your tax return on your rental property.

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Posts: 407
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(@aspidistra)
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Thanks both. I am probably going to use Sovereign as a fiscal rep, it seems I then have to pay for accountancy as a separate thing? Feels like the fiscal rep gets money doing nothing but checking that a tax return is sent in?

If anyone can recommend a good accountant in the central Algarve…I know this is something all the big companies offer but ideally I would like someone you can occasionally ask a question to without them charging you massive additional fees. Not asking for anything for free but it does seem anything to do with money costs, well, a lot of money.

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(@sonia)
Joined: 11 months ago

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@aspidistra Verónica an American expat that has an youtube channel (American In Portugal) recently did an interview with an accountant from faro, he talked about the fiscal representative and some other things.

 

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(@jeanne)
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@sonia   I also saw veronicas YouTube with her accountant. It surprised me to hear him say that US social security is definitely NOT taxed as  pension income under the NHR.  I think all the other interviews I've seen with Portuguese financial folk have said that SS definitely IS taxed.  Or did I hear him incorrectly?

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(@chabu)
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@jeanne Social Security is not taxed in Portugal because of the tax treaty with US (source of income is in US so it is taxed in US).

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(@jeanne)
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@chabu   thank you.  Do you know if / how ROTH withdrawals would be handled?  The tax has been paid on the 'front end', but only in the initial investment.  How does PT taxation view that at the time of withdrawal? 

401k withdrawals will be taxed by the US, so those will clearly not be taxed by PT.

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(@alleycat)
Joined: 9 months ago

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@jeanne Yes, I too have that very same question about ROTH withdrawals and can't find any reference info to this answer yet...wondering if you have any more clarity on it since your post last August? Thanks!

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(@jeanne)
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@alleycat   Hi. No further info on this yet, but I think this will be the first year for filing taxes with the 10% rate-on-pension-income under the NHR. So as people now start dealing with their 2021 taxes, I'm hoping to read about others' filing experiences.

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Posts: 62
 QBV
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(@bon-ventos)
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Joined: 14 years ago

You do not specify what regime you will be renting under. If you are going the AL route, no deductions are allowed. That is taken into account as you are taxed on only 35% on the turnover. Regardless, as everyone else advises, talking to an accountant (or 3) is the way forward.

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Posts: 62
 QBV
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(@bon-ventos)
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Joined: 14 years ago

You do not specify what regime you will be renting under. If you are going the AL route, no deductions are allowed. That is taken into account as you are taxed on only 35% on the turnover. Regardless, as everyone else advises, talking to an accountant (or 3) is the way forward.

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(@aspidistra)
Joined: 10 months ago

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@bon-ventos thanks. Yes, the AL route. When you say you are taxed at only 35% on turnover, do you mean only 35% of your net rental income, after taking off agent's fees etc? I'm a bit confused by you using the word turnover? 

 

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Premium Member
(@tygger)
Joined: 5 years ago

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@aspidistra Turnover is all income before any deductions for any allowable expenses, one of my favourite sayings is "turnover is vanity and profit is sanity" 😊

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 QBV
VIP Member
(@bon-ventos)
Joined: 14 years ago

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Posts: 62

@aspidistra Gross income, as Tygger pointed out. However, if you go over 11000 you have to register for IVA and pay IVA (at 6%) on that turnover BUT it means you can claim back IVA on expenses - utilities, repairs etc. which is mostly at 23%. Do the sums and be surprised. Worth noting that you can voluntarily register for IVA under 11000. It does mean quarterly IVA returns and another reason to have an accountant.

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