When it comes to accountability to the Lion, many doubts arise. How to report on real estate, for example, is a big question for some people. But you need not worry, as this article will reveal how to declare a property in the Income Tax, highlighting the differences in the declaration of own properties (financed and paid off) and rented properties.
The property declaration varies according to the annual income of each person. All people who earn over R $ 28,559.70 per year must inform if they have any property, regardless of the value of the property. For those who do not reach this minimum, the declaration is only mandatory, if they have properties above R $ 300 thousand. This information applies to residential and commercial properties, located in both urban and rural areas.
If you still do not know how to declare a property in the Income Tax, read this article to the end to learn how to correctly fill out the document provided by the IRS through the IRPF program. You will discover how to declare a financed property; how to declare a property already paid; and how to declare rent expenses in the Income Tax, among other things.
How to declare a property in the Income Tax?
The properties purchased must be described in the “Goods and Rights” form, based on the deed of each of them (the leased goods are described in another form, as we will see below). In the form in question, there are several fields for the taxpayer to fill out. One of them is the “Code” field, where you must distinguish the different types of property. Codes 11, 12, and 13 are used to classify apartments, houses and land, respectively.
When declaring the property in the Income Tax, in the form “Goods and Rights”, you need to keep in mind that all possible information must be informed in the field “Discrimination”. Such as: if the property was purchased, from whom it was purchased, when the purchase was made, whether the purchase was made in cash, whether the property is financed or paid off, etc. If the property is financed, inform the financial institution that granted the financing.
In addition, you must report the price you actually paid for the property by the end of the year prior to the year of the declaration, including the Real Estate Transfer Tax (ITBI), the brokerage fee and the financing interest, if applicable. As a taxpayer, you cannot update the price, even if the property has been valued. Updating is only allowed in cases of retirement when you have the means to prove the expenses by means of invoices and receipts.
In other fields, there is space to enter the IPTU, the address and registration of the property, information that can be checked in the IPTU booklet. Regarding the “Registration” field, you only need to fill in the blanks, if your property is not registered with the Real Estate Registry Office. Otherwise, just click on “Yes” to make the field in question disappear. Remembering that it is important to keep the documents of the property to present to the IRS in case of any problem. Only then will you not run the risk of falling into “fine mesh”.
Differences in the declaration of real estate
Now that you know the general step by step to declare a property in the Income Tax, how about learning about the specifics of declaring different properties? Each of them is declared in a specific way, as you can see below:
How to declare property financed in the Income Tax?
If you have financed your property, the asset must be declared on the “Property and Rights” form, not on the “Real Debts and Charges” form. The second form can even be forgotten at the moment, as it is intended for unsecured debts, such as bank loans or between individuals. Real estate financing must be informed only in the form “Goods and Rights”.
As mentioned, all possible information about the property must be described in the “Discrimination” field. In this case, it is necessary to inform that the property was financed, which bank granted the financing, from whom the property was acquired, with the seller’s CPF or CNPJ, when the purchase was made, how many installments have already been paid and how many are still pending.
To declare a property financed in the Income Tax, you must update the amount paid annually. If you financed a property in 2018, in the first half of 2019, you must fill the field “Situation on 12/31/2017” with “0.00” and indicate the amount paid (entry plus installments) until December 31 2018, in the field “Situation on 12/31/2018”. In the first semester of 2020, in the field “Situation on 12/31/2019”, you must indicate the sum of the amount paid in 2018 plus the amount of the installments in 2019. If until 2018 you paid R $ 150 thousand, considering that the 2019 installments were equivalent to R $ 2 thousand, the amount declared in 2020 will be R $ 174 thousand.
The procedure described above must be repeated until the property is paid off. Each year, you must declare the amount paid in the previous year, that is, the amount paid in the previous year plus the installments paid in the previous year. When the financing ends, the declared amount will be equal to the amount disbursed during all the financing years. Therefore, if you financed a property of R $ 600 thousand, at the end of the defined time, you will declare exactly this amount to the Federal Revenue Service. Before that, you must declare only the amount paid up to the year preceding the year of each declaration, and not the total value of the property (in this case, R $ 600 thousand).
How to declare property paid in Income Tax?
Did you buy a financed property and have finished paying the financing? So now you have a paid property. And to declare property paid in the Income Tax, just enter in the field “Discrimination” all the information related to the discharge and repeat the amount declared after the discharge in the following years. If you already had a property paid in 2019, in the year 2020, you must repeat the value of the column “Situation on 12/31/2018” in the column “Situation on 12/31/2019” and so on.
The value of the property already paid can only change if you make any changes to the property or forget to declare the ITBI and the brokerage fee. In the case of renovations, the amount must be updated in the “Discrimination” field as in the following example: “Property acquired on 06/05/2008, financed by bank Y (already settled) in ten years for the amount of R $ 400 thousand. I did renovations in May 2019 and spent R $ 15,000. Therefore, the value of this declaration was increased to R $ 415 thousand. ” Following the logic of the example presented, the situation on 12/31/2018 would be R $ 400 thousand; on 12/31/2019, R $ 415 thousand.
Property in sight
Well, if you bought your property in cash in 2019, just inform in the field “Discrimination”, in 2020, that the property was paid in cash, from whom you bought, the amount paid for the property in the purchase etc. In addition, it is necessary to fill the field “Situation on 12/31/2019” with the amount paid in cash. In subsequent years, you must fill in the respective fields with the same amount. The fields “Situation on 12/31/2019” and “Situation on 12/31/2020”, for example, will be the same. When buying in cash, the declared value is only changed in one of the cases mentioned above.
How to declare rent expenses?
Homeowners are not the only ones who must declare a property in the Income Tax. On the contrary, whoever pays rent must also be accountable to the Lion. And to declare rent expenses in the Income Tax, the lessee must inform his expenses in the form “Payments Made”, using the code “70 – Rent Paid”. The declared amount must be the amount paid to the lessor in the year preceding the year of the declaration.
So, if you are going to declare rent expenses in 2020, you will have to inform the amount spent with your rent in 2019. You must also include, in the “Payments Made” form, the name and CPF of the landlord, which can be checked at the Lease agreement. Subsequently, the IRS will cross-check the data presented by you with the data presented by the landlord, who must make a declaration regarding the amount received, and check if they complement each other.
It is worth mentioning that declaring rent expenses in the Income Tax is the responsibility of whoever signed the contract. Therefore, even if you live with other people, if only your name is on the contract, you will be responsible for the declaration. On the other hand, if all residents are included in the contract, each must declare their share to the IRS. Declaring your share of the rent is a very important detail, as it avoids problems when the IRS identifies that you do not have enough income to cover the rent alone.
How to declare a property on behalf of two people?
To declare a property in the Income Tax that was purchased by a couple united by total separation of assets, the two people must declare the property, each being responsible for their share. In this case, each person declares the part they paid for the purchase. If each has power over 50% of the property, both will have to declare half the amount paid on the property. This is not only true for purchases made by a couple, but also for siblings, etc.
How to declare property purchased by a couple in the partial or total union of assets?
Contrary to what happens with the couple united by total separation of assets, only one person of the couple united by the partial or total union of goods needs to declare the property purchased. In this case, it is enough to inform in the field “Discrimination” that the property was acquired by the couple. The big difference between total and partial union of goods is that, in total union, all the couple’s goods are common, even those that were purchased before the union. In the partial, only the goods acquired after the union are considered common and belong to both people.
How to declare property received by donation?
Another type of property that must be declared is one that was received by donation. If your property was received in 2019, in the year 2020, you must fill in the “Discrimination” field of the “Goods and Rights” form with information regarding the donation, such as name and CPF of the donor and value of the property. In addition, the property must be declared in the form “Exempt and Non-Taxable Income”, inline “10 – Patrimonial Transfers – Inheritance Donations”. In the following years, only the “Goods and Rights” form must be filled out.
Why is it necessary to declare a property in the Income Tax?
Informing properties in the Income Tax is part of the obligation of several citizens before the Federal Revenue Service. Therefore, to correctly declare income tax property, if you still do not feel ready to declare your accounts yourself, look for a qualified person to help, such as an accountant!Tags: buy to let tax, buy to let taxation, buy to let taxes, buying to let tax, can i rent out my house without telling my mortgage lender, caught not claiming rental income, do i have to pay taxes on rental income, do i pay tax on rental income, do you have to pay taxes on rental income, do you pay tax on rental income, letting tax, paying tax on rental property, renting property tax implications, tax implications of rental property, what are the tax implications of paying off a rental property