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Property Rental Reduction: Secrets and pitfalls for covid rentals - What homeowners need to look out for [tables with the amounts of compensation]

They will be financially benefited, after all, those owners who lease real estate to businesses that have been forced, by state order, to remain closed or to minimize their activities, due to restrictive measures against coronavirus, and have agreed to receive monthly rent amounts over 1.200 euro………

On the other side, those owners who lease real estate to businesses that remain closed, by state order, or have been obliged to reduce their activities to a minimum and have agreed with these companies to receive monthly rent amounts up to 1.200 will not be fully covered by the compensation they will receive for the unpaid rents of the first quarter.

Great damage

As the government has already announced, natural persons who lease their real estate to companies in the retail sector, of catering, of the civilization, of sports, tourism, of Transportation, as well as in gyms, salons, Beauty salons, bookstores and other non-operating or heavily affected businesses are not allowed to collect rent from these businesses for the entire period January-March 2021.

The reason is that these companies have suffered a great deal of financial loss, as they have been forced not to operate or to operate with significant limitation of their activities for very long periods of time, due to successive universal and local lockdowns.

Non-payment of rents for the first three months 2021, with the official permission of the state, but it would cause huge income losses to the owners - natural persons who rent their properties to these businesses for professional use, if the state did not decide to compensate them. That is, if he did not decide to grant them tax-free allowances from the State Budget, the amounts of which correspond to 80% of agreed but unpaid rents for January, February and March 2021.

Beneficiaries

A careful analysis of all these government announcements leads to the conclusion that the decision to pay tax-free compensation equal to 80% of lost rents to all landlords who rent real estate in the above categories of businesses will benefit the most those landlords who have agreed to receive very high monthly rents, over 1.200 euro, as it will greatly offset their income losses. He will add, namely, much more money in their income. On the other side, for landlords who receive rents up to 1.200 per month, the compensation will not cover all income losses.

essentially, the net amounts of compensation eligible to receive from the state those landlords who have agreed to receive very high monthly rents in the first quarter of 2021, are much higher than the net rent amounts they would get "on hand", if the full exemption of the hired companies did not apply! This is because:

»For the middle, high and very high rental income tax is applied with graduated income tax rates 15%, 35% and 45%, as well as with scalable rates of Special Solidarity Contribution 6,5%, 7,5%, 9% and 10% which limit the final amounts left in the hands of the owners to levels lower by 30% until 55% of nominal rents.

»The compensation that the State will give to the owners is tax-free and its amount is set at a lower level by 20% of nominal rents.

examples

particularly, as shown by the examples in the detailed table we publish:

1 Those owners of rented properties had agreed, for the months of January, February and March of this year to collect from their tenant entrepreneurs monthly rent amounts equal to or greater than 1.200 euro, will receive compensation amounts that cover the 80% of rents, but in fact they are much higher than the net amounts they would have received if the government had not relieved their tenants of the obligation to pay rent.

If these landlords were normally receiving the rent they had agreed upon, then these would be taxed in stages with income tax rates 15%, 35% and 45% causing total tax burdens higher than 18,3%, as well as with scalable rates of Special Solidarity Contribution 2,2%-10%, so in the end the net rent amounts they would get in hand would be "cut" by 20,5% – 50% approximately compared to the agreed amounts! T

but time that, after all, these landlords did not collect the January rents, February and March 2021 from their tenants and therefore will not have to pay taxes on them which reduce them by 20,5% – 55%, but instead will receive tax-free compensation from the state covering the 80% of rents of its first quarter 2021, the amounts that will eventually be left in their hands will be much larger, as they will be "cut" only by 20%! The following examples are indicative:

»Commercial real estate owner who had agreed with his tenants-entrepreneurs to receive monthly rents of a total amount 3.000 euros for each of the months of January, February and March of 2021 if he received these amounts properly he would be forced to pay income tax and a Special Solidarity Contribution of a total amount 947,17 on a monthly basis or 2.841,51 on a quarterly basis, so they would be left in his hand 2.052,83 on a monthly basis or 6.158,49 on a quarterly basis.

After all, with the regulation legislated by the government, this owner will receive tax-free compensation equal to 80% of rents, namely 2.400 on a monthly basis or 7.200 on a quarterly basis. In that way, will take in hand 347,17 more on a monthly basis or 1.941,51 euros more on a quarterly basis, of what he would get if he normally received the agreed rents from his tenants!

»Owner of a commercial property in a high commercial value area of ​​an urban center, who had agreed with his tenant entrepreneur to receive a monthly rent totaling 10.000 euros for each of the months of January, February and March of 2021 if he received this rent normally in the first quarter of this year he would be forced to pay income tax and a Special Solidarity Contribution of a total amount 4.687,58 on a monthly basis or 9.375,16 on a bi-monthly basis, so they would be left in his hand 5.312,42 on a monthly basis or 15.937,26 on a quarterly basis.

With the regulation legislated by the government, this owner will receive tax-free from the state 80% of three-month rents, as compensation. He will receive, namely, 8.000 on a monthly basis or 24.000 on a quarterly basis, where is 2.687,58 more on a monthly basis or 8.062,74 euros more on a quarterly basis, of what he would get if he received his rent normally.

2 On the other side, the owners who had agreed, for the months of January, February and March to collect from their rental entrepreneurs monthly rent amounts up to 1.200 euro, they will also receive compensation amounts covering the 80% of rents, but the amounts they will get, after all, in hand will be a few hundred euros less than what they would have received if the government had not released their tenants.

For example, owner of a commercial property who had agreed to receive a monthly rent 500 euros for each of the months of January, February and March of 2021, if you normally received the rent during those months he would only pay income tax on it 15%, while it would be exempt from the Special Solidarity Contribution. In other words, he would pay tax in total 75 on a monthly basis or 225 on a quarterly basis, so they would be left in his hand 425 on a monthly basis or 1.275 on a quarterly basis.

With the regulation legislated by the government, this owner will receive tax-free from the state 80% of rent, as compensation. He will receive, namely, 400 on a monthly basis or 1.200 on a quarterly basis, where is 25 euros less on a monthly basis or 75 euros less on a quarterly basis, of what he would get if he received his rent normally.

TRIPLE "BREATH" for the uncollected rents

Exemption of thousands of rented property owners from income tax for all uncollected rents during the pandemic period, without the prerequisite legal procedures currently provided by the Income Tax Code promotes the Ministry of Finance.

Furthermore, the ministry proceeds with the payment of compensation to those landlords who were forced not to collect any commercial rent in the first two months 2021, as well as to those who were forced to make a discount 40% in the rents of the first two months of this year.

Alongside, to those owners who did not receive compensation for "cut" against 40% rents for the months of March-December 2020, while he was entitled to them, they are given another opportunity to secure them by submitting COVID correction statements.

Statements 2020

According to reports, specifically for tax year income tax returns 2020, which will be submitted this year, finance ministry expected to introduce full income tax exemption for thousands of landlords who have faced tenants' refusal to pay their rent.

The exemption will apply to all rental amounts not received by landlords in one or more months of the March-December period. 2020 and will be granted without the need for prior legal action against tenants requiring transactions with court services, such as bringing an action for expulsion or award of rent, the issuance of a payment order or a payroll return order, etc..

This setting, which has been proposed to the Ministry of Finance by the Panhellenic Federation of Property Owners (POMIDA), will apply to both owners who have joined the arrangements for forced reductions against 40% of rents and did not receive the rest from their tenants 60% as well as owners who did not join the forced reductions against 40% but did not receive all or part of the rent from their tenants.

The regulation will apply in cases where tenants have refused to pay rent to landlords citing financial weakness.

For the complete exemption of the owners from the income tax on the uncollected rents, the issuance and notification of an out-of-court declaration by the landlord to the tenant through a bailiff will suffice..

The purpose of this special arrangement will be to relieve the owners of the obligation to exercise legal remedies that require presence in court services., as provided in force here and 6 chronic provisions for uncollected rents, as the courts are closed due to quarantine and it is practically impossible to process any appeal procedure.

Collection of compensation

In the meantime, most of 276.000 property owners who either did not receive the January and February rents at all or received them reduced by 40% have begun to receive compensation.

According, particularly, with what the Ministry of Finance announced, compensation has already begun to be paid those owners who submitted by 10 March COVID statements on lost January rents, as long as their statements have been cleared without any problems.

After 30 Landlords will be paid for lost January rent in the submitted COVID declarations whose errors have been identified but have finally been corrected. In the meantime, The process of submitting COVID declarations for the lost rents of February has already started.

This process will be completed by the end of March, and compensations for the lost rents of February will be paid in two cycles, which will start the first after 15 April and the second after Easter.

For each landlord who was forced to not collect any rent during the months of January and February of this year, the compensation he is entitled to receive amounts to 80% of lost rents.

For each landlord who was forced to collect January and February rents reduced by 40% the compensations he is entitled to cover the 50% of lost rents or 20% of the total agreed rents.

Amending COVID declarations for the period March - December 2020

According to what has been announced by the Ministry of Finance, about 100.000 owners of rented properties that, although they were forced to receive the rents of the months of March-December 2020 decreased by 40% or at least against 30%, have not received the compensation they were entitled to from the state and now have the possibility to correct errors or omissions in the submitted lease information declarations and in the submitted lease declaration declarations. (COVID statements) for these months.

As long as they correct the mistakes and cover the omissions, by submitting the relevant amendment declarations to the TAXISnet system, they will also be able to secure the right to receive compensation, which take the form of tax deductions equal to 12% of unpaid rents for the months of March to October 2020 and the form of direct financial assistance equal to 20% of unpaid rents for the months of November and December 2020.

The Independent Revenue Authority (Principle of authorization) set since Friday 19 March in operation in the TAXISnet system the platform for submitting amending statements of lease information and amending statements of rent reduction (COVID declarations), for the period March - December 2020, in order of approx 100.000 landlords who have not received compensation for the lost rents of these months to secure them and receive them from April onwards.

Already, property owners, who have submitted lease information statements or COVID statements with errors or omissions, receive an e-mail from AADE to visit the relevant website (option COVID STATEMENTS). There, can be informed of the status of their statements (acceptance, processing process), as well as receive instructions for correcting errors or omissions. The platform will accept modifying statements up to 19 April 2021.

Simultaneously, AADE also launched the platform for submitting lease termination declarations without fines, for all leases that have been terminated until June 12 2020. This platform will operate until 12 April 2021. AADE recommends to the owners, who have submitted COVID declarations for properties with successive leases on the Lease Information platform, to declare the termination of previous leases, to expedite the processing of these statements.

WHICH OWNERS OF LEASED REAL ESTATE WILL HAVE LOSSES AND WHO WILL HAVE BENEFITS FROM THE IMPLEMENTATION OF THE MEASURE PROVIDING FOR THE PAYMENT OF COMPENSATION EQUAL TO 80%

OF THE LOST RENTALS OF THE MONTHS OF JANUARY, FEBRUARY AND MARCH 2021

Monthly rent Monthly netowner income

if you received normally

the rent (*)

(1)

Monthly TAX FREE owner compensationnow that he is not receiving the rent normally

(2)

Total DUTY FREEcompensation

owner

in the quarter January - March 2021

(3)=(2)+(2)+(2)

Monthly difference(4)=(2)-(1)

(negative

amount = damage,

positive

amount = benefit)

Difference

in the τρίμηνο

(5)=(4)+(4)+(4)

(negative

amount = damage,

positive

amount = benefit)

500 425 400 1.200,00 -25 -75
600 510 480 1.440,00 -30 -90
700 595 560 1.680,00 -35 -105
800 680 640 1.920,00 -40 -120
900 765 720 2.160,00 -45 -135
1.000 850 800 2.400,00 -50 -150
1.200 975,60 960 2.880,00 -15,6 -46,8
1.400 1.101,20 1.120,00 3.360,00 18,8 56,4
1.600 1.226,80 1.280,00 3.840,00 53,2 159,6
1.800 1.348,67 1.440,00 4.320,00 91,33 273,99
2.000 1.468,67 1.600,00 4.800,00 131,33 393,99
3.000 2.052,83 2.400,00 7.200,00 347,17 1.041,51
3.200 2.149,83 2.560,00 7.680,00 410,17 1.230,51
4.000 2.531,17 3.200,00 9.600,00 668,83 2.006,49
5.000 3.006,17 4.000,00 12.000,00 993,83 2.981,49
6.000 3.472,42 4.800,00 14.400,00 1.327,58 3.982,74
7.000 3.932,42 5.600,00 16.800,00 1.667,58 5.002,74
8.000 4.392,42 6.400,00 19.200,00 2.007,58 6.022,74
9.000 4.852,42 7.200,00 21.600,00 2.347,58 7.042,74
10.000 5.312,42 8.000,00 24.000,00 2.687,58 8.062,74
11.000 5.772,42 8.800,00 26.400,00 3.027,58 9.082,74
12.000 6.232,42 9.600,00 28.800,00 3.367,58 10.102,74
13.000 6.692,42 10.400,00 31.200,00 3.707,58 11.122,74
14.000 7.152,42 11.200,00 33.600,00 4.047,58 12.142,74
15.000 7.612,42 12.000,00 36.000,00 4.387,58 13.162,74
16.000 8.072,42 12.800,00 38.400,00 4.727,58 14.182,74
17.000 8.532,42 13.600,00 40.800,00 5.067,58 15.202,74
18.000 8.992,42 14.400,00 43.200,00 5.407,58 16.222,74
19.000 9.445,75 15.200,00 45.600,00 5.754,25 17.262,75
20.000 9.895,75 16.000,00 48.000,00 6.104,25 18.312,75

(*) The monthly net income arises after deducting the corresponding income tax and the corresponding Special Solidarity Contribution from the monthly rent of the first column.

GIORGOS PALAITSAKIS - From the print edition of the Free Press on Sunday

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