Tax Preparation for House Property Owner In Bangladesh

Tax Preparation for House Property Owner
Tax Preparation for House Property Owner

Today’s article will discuss the entire tax preparation process for the house property owner. On a large scale, those who own many assets such as flats or building houses in Bangladesh can know how to prepare the tax for their house property, how much tax will come, and at what rate with tax will be assessed. So without further ado, let’s get to the main discussion.

Tax For House Property Owner In Bangladesh

Various tax-related schedules for the house property owner are described as per the tax rules of the Bangladesh government. Several schedules in this tax policy deal with taxes for house property owners under various clauses; all tax-related information will be presented in this article.

We will present the tax preparation procedures for the house property owner straightforwardly by describing the various procedures prescribed by the government.

The house owner has to calculate various income and expenses allocated to income tax. Some income for maintenance, repair, etc., of the house property will be deducted from the basic income and total taxable from the excluded amount. Tax will be calculated on the income.

A little difficult to understand but very easy if you read and understand everything carefully. We will now discuss which incomes are taxable and tax deductible for the house property owner. Keep following the article till the end to know them.

Gross Income for House Property

Before preparing the property tax, we need to know what will be included in the property tax. Home equity is the income you own from your home and all the income that comes with it. Therefore, you first need to know which incomes are considered home assets.

If a house owner rents out his house, the income he earns from the rent in a year will be included in the list of creditable income.

If the landlord collects rent in advance from the tenant, then the total rent will also be added to the list of income.

Adding these, the income from his real house property will be shown in the Income Tax Book. Expenses will be deducted from the income of the house property.

Repairs and maintenance of house property will be excluded from the total taxable income of the property. Tax will be calculated on the income remaining after deducting these. Those costs are mentioned below.

Total Expenditure for House Property

Expenses for maintenance and repair of house property will be deducted from the amount a house owner pays for his house every year. The money he spends on maintenance, repair, etc., will be calculated and shown in the total expenditure account.

  • It is noted here that if the house property is for residential purposes, he can show 25% expenditure on gross income. For commercial purposes, he can show a 30% expenditure on gross income to repair the house property.
  • Municipal tax or local tax.
  • Land revenue.
  • Interest on house property loan.
  • If insured on house property, that insurance cost.
  • Account of expenditure due to the vacancy of house property means if a person owns a house and one of his flats is vacant, he can add the expenditure incurred on that flat to the expenditure account.
  • If he has incurred other expenses related to the house property, he can show them in the expense account.

The tax is calculated on the income left after deducting the total expenditure on the house property from the total income. Below is the tax calculation method.

House Property Tax Calculation In Bangladesh

Now let’s go to the main discussion. The main discussion will be how to calculate tax on a person’s house property. They are above-discussed income from house property and expenditure on house property. We will now know how to calculate it through an example. Let’s find out.

Suppose a person has a five-storied building in Dhaka city. He lives with his family on the ground floor of this building and rents out the remaining four floors. He paid 15,000 per floor.

Now 15000 will be 12 months rent for his four-floor = 15000x4x12 = 720000

Then his total income from house rent is 720000

Now we need to know how much money he has spent on the house property.

Think the person has rented the house for residential use. Then he can deduct 25% of the repair cost on his house rent for residential purposes.

The total expenditure on 720000 = 720,000×25% = 180,000

In addition, the person has paid 20000 TK for municipal tax and 10,000 TK for land revenue. Then this total of 30,000 will be deducted from the total rental income.

Then his total expenditure on house property = (180,000 + 30,000 + 10,000) = 220,000

Then his total taxable income will be = (720,000 – 220,000) = Then the above person’s tax will be calculated on this amount.

We know that a person will get 0% tax up to 300,000 TK

If the income is 100,000 above 300,000 TK, the tax will be calculated at 5%.

In the next 300,000 TK, his tax will be calculated at 10%.

Then if the above person deducts the first 300,000 TK from tax, he is left with (500,000-300,000) = 200,000

Then tax on 100,000 above 300,000 will be 5%. Then the person’s tax on the next 100,000 will be 5000.

Remaining (200,000-100,000) = 100,000 TK

As per the tax rules, the tax will be 10% on the next 300,000. Then the tax on the remaining 100,000 of that person will be 10,000.

Then that person has to pay a total tax of 15,000.

So this is the method of calculating the tax on house property. I hope you got to know about the method of calculation of tax on house property. You can let us know through the comment box to get answers to various questions related to this. Thank you.