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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4542
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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If you have had a commercial building built own purposes and

Customer Question

If you have had a commercial building built for your own purposes and have the building heavily financed, which means the rent you charge goes totally to the Bank to pay off the loan, are you still going to be taxed by the ird on that total rent income when you do not physically get to keep the rent as it goes direct to the Bank?
If so where are you expected to get the tax money from? You have no spare money to pay
Submitted: 1 year ago.
Category: Finance
Expert:  Rakhi Vasavada replied 1 year ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

I am sorry to point out that an income is an income and the tax department -- IRD -- considers all rental incomes as income. To IRD, it just does not matter that you use that rental income to pay back to the bank.

IRD treats all rental incomes equally. It does not matter to IRD if you earn that income from a financed property or not and it shall thus treat income / rental income earned by you as just any other rental income.

So, to make it simpler, even if the rent you charge goes directly to the bank to pay off the loan, you will still be taxed by the IRD on the rental income that you earn.

I am sure this would help. I wish you good luck.

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Warm Regards,