Dr. Mohamed A. Hamada Lecturer of Accounting Information Systems 1-1 Chapter 5 Tax on Incomes from Real Estate Property

Types of taxes: Any tax system includes two main types of taxes: 1.Direct tax: It is imposed on income when it is earned. Under it the taxpayer can't shift tax amount to others. Like: commercial tax, salaries tax. 2. Indirect tax: It is imposed on income when it is spent or utilized. The tax amount could be easily shifted from taxpayer to other one. Like: general sales tax.

Two groups: 1- Natural persons (individuals): Any individual is considering a natural person. He has to submit the tax return within three months from the end of the taxable year (calendar year). The last day to submit the tax return is March, 31 each year. 2-Juridical persons (companies): Juridical persons include all different types of companies such as solo Company, Partnership, and Corporation. They have to submit the tax return within four months from the end of the taxable year. The last day to submit the tax return is first of May each year. Persons subject to tax in Egypt.

Kinds of tax systems There are two types of tax systems: 1- Scheduler tax system: Under this system: A separate tax is imposed for each kind or source of incomes after some deductions. Each kind of tax has its subject, revenue, rate, ……..etc. The taxpayer has to present more than one tax return to the tax authority for each activity like commercial, free profession, real estate.

Kinds of tax systems 2-Unified tax system: Under this system: One tax is imposed on the aggregated income from all sources in one base, after deducting some allowances and deductions from the total income from all sources. Only one tax return should be presented to the tax authority, including all incomes from all sources.

What are the sources of income? The income results from the wealth that is owned by the person, which is divided into two kinds: a.Mobile wealth: b. Real estate wealth:

What are the sources of income? a. Mobile wealth: Include all wealth resulted from: Work. Capital. Work and capital. b. Real estate wealth: Include all wealth resulted from: Building. Agricultural land.

Chapter Five Tax on Incomes from Real Estate Property.

Definition of Tax on Incomes from Real Estate Property It is a direct Tax on Incomes generated from Leasable Land and Buildings Properties imposed according the Egyptian Laws.

Main feature of Tax on Incomes from Real Estate Property. The main features of this Tax as follow : It is a direct Tax. It is applied on Incomes from Leasable Real Estate Properties.

It is imposed on Incomes realized in Egypt by Egyptian Citizens or by Foreigners. It considers Family Allowance and pre-paid Tax, and Tax on the same Building.

Determination of Taxable Incomes from Real Estate Property. This Tax is imposed on the following Incomes : (1) – Actual Incomes from Leas-able Buildings, Less : 50% for Costs and Expenditures, Less: Pre-paid Tax according to the Law No. (82) / 2005.

( 2 ) – Actual Incomes from Leas-able Furniture Property according to the Article No. (40 ) from the Law No. (91)/ 2005, Less: 50 % for Costs and Expenses and Less: Pre-paid Tax of Property Fees. Less : Family Allowance.

Deductible and Allowances of Taxable Incomes from Real Estate Property. The main items should be deducted are as follow : 50 % for Costs and Expenses. Pre-paid Tax and Fees for the same Property. Family Allowance if it is not deducted from any Taxable Incomes before.

Rate of Tax on Incomes from Real Estate Property. The Rate of Tax are as follow : = Family Allowance L.E = More than L.E up to Tax Rate 10% = More than L.E up to Tax Rate 15% = Above L.E Tax Rate 20%

Calculating Procedures of Tax on Incomes from Real Estate Property. This Tax is calculated as follow: ( 1 ) – Determine the actual Income during the year from Real Estate Property. ( 2 ) – Deduct 50 % for Costs and Expenses.

( 3 ) - Deduct Family Allowance if it is not deducted from another Income to reach to the Tax Base.

( 4 ) – Calculate the Due Tax according to the previous steps by multiplying the Tax Base by Tax Rate. (5 )- Deduct the actual Property fees paid during the Year to reach to the net Tax on Real Estate Property.

Tax statement On Incomes from Real Estate Property Items of Tax Amount $- Taxable Incomes Total Incomes Less : 50% For Costs and Expenses. Total Deductions $ Net Income before Family Allowance $ - Family Allowance $ - Taxable Income ( Tax Base ) $- Tax Rate 10% $ - Due Tax = ×10% = 1500 = 5000 × 15% = $- Less: Paid Fees Net Tax should Paid 250

End of the Chapter

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