Income tax on rent, worked example, in El Salvador

July 26, 2018

Non-resident couple´s joint rental income1
Monthly Rental Income2 1,500 6,000 12,000
Annual Rental Income 18,000 72,000 144,000
Less 13% VAT3 2,340 9,360 18,720
Less Expenses4 (3,113) (8,570) (13,720)
Less Depreciation5 (5,000) (22,500) (43,114)
= Taxable Income 7,547 31,570 68,446
Income Tax Rates6
Flat Rate 30% 2,264 9,471 20,534
= Annual Tax Due 2,264 9,471 20,534
OtherTax
VAT7 13% 2,340 9,360 18,720
Annual Income Tax Due 4,604 18,831 39,254
Tax Due as % of Gross Income 25.58% 26.15% 27.28%

Notes


Grant Thornton El Salvador is a member firm of Grant Thornton International. Grant Thornton International is not a worldwide partnership. Member firms of the international organization are independently owned and operated.

1 The property is jointly owned by husband and wife.

2 Exchange rate used: 1.00 US$ = 8.75 SVC

3 The 13% Value Added Tax (VAT) has to be deducted from the gross rental income before calculating the taxable income.

4 Estimated values.

5 Estimated values.

6 Rental income earned by nonresident individuals is subject to a flat rate of 30%.

7 Value Added Tax (VAT) is payable when leasing property. It is not applied to the income tax liability but is payable over the gross rental income.