Tax on property income in Macedonia
Taxation Researcher | January 12, 2023
Tax Rate on Rental Income
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Nonresidents are liable to pay taxes only for their income from North Macedonian sources. Personal allowances are not available to nonresidents.
Income is taxed at a flat rate of 10%. The taxable base depends on which kind of income is being taxed, as the rules for deducting expenses vary with the categories.
Taxable income includes: (1) personal earnings (salaries and bonuses), (2) income from agricultural activities, (3) income from individual business and professional activities, (4) real estate income, (5) royalties, (6) capital income, (7) income from games of chance, and (8) other income.
Rental income is taxed at a flat rate of 10%. Income-generating expenses and depreciation costs are deductible when calculating taxable rental income.
A statutory deduction of 25% of gross rent is given to account for income-generating expenses. Alternatively, taxpayers can opt for itemized deduction instead of availing the standard deduction.
Capital gains from the sale of real estate property are taxed as ordinary income at the 10% rate. Capital gains are calculated as selling price less acquisition costs and incidental transaction costs. The tax is then levied on 90% of the calculated capital gains.
Sales transactions that are exempt from capital gains:
- Property is sold following three years as of date of purchase, in case the taxpayer has lived in it for at least a year prior to the sale
- Property is sold after five years as of date of purchase
REAL ESTATE TAX
Real estate tax is levied on the market value of the property. The rates are determined by the municipalities and range from 0.10% to 0.20%.
Corporate income and capital gains are taxed at a flat rate of 10%. Expenses incurred in the generation of income are deductible when calculating the taxable income.
Capital gains are calculated as selling price less acquisition costs and incidental transaction costs. The tax is then levied on 90% of the calculated capital gains.