Uncollected rents: Who and how will not be taxed – 2024-03-14 16:34:37

POMIDA, in view of the start of the process of submitting the 2023 income tax returns, has prepared a useful guide with the applicable substantive provisions and procedural circulars, regarding which real estate lessors, when and with what procedure are entitled to seek the deferral of taxation of uncollectibles rents.

The non-payment of rent and the practical impossibility of collecting it from insolvent tenants is a perennial problem of real estate landlords and one of the factors in the decrease in the supply of houses for rent, the federation of real estate owners points out.

The non-taxation of uncollected rents was a constant demand of POMIDA, which, after the eventful final abolition of the possibility of exemption due to their assignment to the State, came back claiming a definitive solution to the problem through a process of postponing their taxation for as long as they have not been collected according to the publication of ot.gr.

Who, when and how are entitled to postpone their taxation

In order to accept the postponement of their taxation, without the risk of extensive evasion that would lead to a huge loss of tax revenue and consequently to the reversal of any favorable regulation, the Ministry of Finance made it clear that a simple declaration by the taxpayer would not sufficebut there should also be a judgment of any kind or even an appeal to justicewhich proves the truth of the statement about non-collection of rents.

With these facts, the solution that was a proposal of POMIDA which was accepted by the then competent Deputy Minister of Finance Mr. Tryphon Alexiadis as it was the only practically possible one, is today essentially and procedurally as follows.

1. Article 11 of Law 4346/2015 defined that: “The income from the rental of real estate, which has not been collected by the beneficiary, is not included in his total income, if by the deadline for submitting the annual income tax return, he has a payment order or an order for the use of wages or a court decision to dismiss or award rents has been issued against the tenant or an action to dismiss or award rents has been brought against the tenant. The incomes in question are taxed in the year and according to the amount proven to have been received, in derogation of the provisions of article 8. The uncollected incomes are declared in a special code of uncollected incomes from the rental of immovable property of the income tax return.
2. In accordance with the later relevant circular POL.1024/12.2.2016 and the instructions for submitting the 2017 tax returns, column 16 of E2 is completed with the amounts of uncollected income from the rental of real estate, provided that by the deadline for submitting the annual income tax return a payment order or a wage payment order or a court decision to dismiss or award rents has been issued against the tenant or an action to dismiss or award rents has been brought against the tenant (par. 4 of art. 39 Law 4172/2013).
3. From the above supporting documents that are presented to the D.O.Y. , the period of time for which rents are due should be stated. Exceptionally, and in order to declare uncollected income for the period between the issuance of the dismissal decision or the order to return the use of rent until its execution, which took place before the deadline for submitting the income tax return, it is sufficient to submit to the competent authority D.O.Y. responsible declaration and eviction and settlement report drawn up by the bailiff, that for the above period the rents have not been collected.
4. With POL.1102/12.7.2016 it was further clarified that uncollected income from the rental of immovable property can only be declared by natural persons who obtain income from the rental / subletting of immovable property, in order not to include them in their income, according to the article 39 par. 4 of Law 4172/2013, the provisions of which do not apply to legal persons and legal entities.
5. On the contrary, uncollected income from the rental of real estate by natural persons cannot be declared, when this income comes from compensation for the use of real estate as well as from the exercise of business activity (e.g. organizing events in halls or estates, tourist exploitation, etc.). In other words, the Administration, without this being provided for by law, and while everywhere the compensation for the use of real estate is equated for tax purposes to rent, limited this possibility only to the uncollected rents of active leases, and does not accept it when these have the character of compensation for use, for the period i.e. after the end of the lease. A grave injustice at the expense of many owners who, because their lease has legally expired, are obliged to pay tax for amounts that have proven never to have been collected!
6. However, neither the law nor the relevant circulars provide for an obligation to discuss the lawsuit, as arbitrarily requested by some D.O.Y., which would be pointless and just an additional financial burden for the unfortunate landlord, given that in in most cases the tenants having withdrawn from the tenancy, refuse to pay anything due, nor is the landlord practically able to collect the least.
7. Procedurally, in order to declare income from the rental of real estate as uncollectible, clear photocopies (photocopies) must be submitted to the competent D.O.Y., before submitting the statement, according to article 1 of Law 4250/2014 (Government Gazette A’74), of the orders, judicial decisions that have been issued or lawsuits that have been filed, up to the deadline for submitting the annual statement. Following this, the uncollected income will be declared on the form “ANALYTICAL STATEMENT FOR REAL ESTATE RENTS” E2 and will be transferred to a special code of the E1 form when submitting the relevant income tax return.
8. The non-collection of rents can only be proven with the supporting documents of paragraph 4 of article 39 of Law 4172/2013 (issued court decision to expel or award rents, issued order for payment or order to return the use of rent, brought an action to expel or award rents), one of which must be provided in any case. Especially in case of bankruptcy of the lessee, it is sufficient to present a copy of the declaration of debts table, in which the claim of the lessor / sublessor appears.
9. Uncollected income from the rental of immovable property can be declared by the heir, who enters into all the rights and obligations of the heir, by presenting one of the supporting documents defined in par. 4 of article 39 of Law 4172/2013, together with the documents legitimizing his right of inheritance.
10. The above supporting documents submitted to the D.O.Y. in order to declare the uncollected incomes will be accepted for the declarant. In the case of the society, the relevant supporting documents will be accepted for all members, regardless of whether any other lessors – sublessors are listed in these details, provided that the provided supporting documents of the rent, the monthly rent and the tenant debtor ( of the heir or the guarantor), are identical to the corresponding data obtained from the tax forms (E1, E2) or from the Real Estate Lease Information Statement or from the lease agreement. In the case of submitting a declaration of deferred taxation of uncollected rents without submitting all the required supporting documents, the tax administration will proceed with new settlements, not taking into account the amounts declared as uncollected income.