Taiwan Rental Income Guide
Taiwan rental income taxation for the individual landlords for 2026. The guide covers: the 43% deemed expense deduction — the landlord may deduct 43% of the gross rental income as the "deemed expenses" (the "必要費用" — the "necessary expenses"), leaving 57% of the rental income taxable at the marginal rates of 5% to 40%; the alternative itemised deduction method — the landlord may deduct the actual expenses (the "列舉扣除" — the "itemised deduction") if the total actual expenses exceed the deemed 43% deduction; the tax reporting — the rental income is reported as the "rental income" (the "租賃所得") on the annual tax return.
43% Deemed Expense Deduction (標準扣除)
- Standard method — 43% deduction: The individual landlord may elect the "standard deduction" method (the "標準扣除" — the "deemed expense deduction") — the landlord deducts 43% of the gross rental income as the "deemed expenses" without the need to substantiate the actual costs. The remaining 57% of the gross rental income is the "taxable rental income" (the "租賃所得" — the "rental income") included in the annual tax return.
- Simple calculation: For example: the monthly rent of TWD 50,000 (TWD 600,000 per year). The deemed expense deduction is TWD 600,000 × 43% = TWD 258,000. The taxable rental income is TWD 600,000 × 57% = TWD 342,000. The tax at the 20% marginal rate: TWD 342,000 × 20% = TWD 68,400.
- No receipts required: The 43% deemed deduction does NOT require the actual expense receipts or the documentation. The landlord simply reports the gross rental income and applies the 43% deduction on the tax return form.
Alternative Itemised Deduction Method (列舉扣除)
- Actual expense deduction: The landlord may elect the "itemised deduction" method (the "列舉扣除" — the "actual expense deduction") if the total actual expenses exceed the deemed 43% deduction. The actual deductible expenses include: (a) the "depreciation" (the "折舊費") — the building depreciation at the rate of 5% per year for the building portion, (b) the "property tax" (the "房屋稅"), (c) the "land tax" (the "地價稅"), (d) the "repair and maintenance" (the "修繕費"), (e) the "management fees" (the "管理費"), (f) the "insurance premiums" (the "保險費" for the fire and the liability insurance), (g) the "mortgage interest" (the "借款利息" — the mortgage interest on the rental property loan).
- Record-keeping required: The itemised deduction method requires the complete record-keeping with the receipts, the invoices, and the supporting documents. The depreciation calculation must follow the tax depreciation rules (the "固定資產耐用年數表" — the "useful life table").
- Comparison example: For the rental property with: the annual rent of TWD 600,000, the actual expenses of TWD 150,000 (the property tax, the insurance, the management fees) plus the depreciation of TWD 100,000 — total TWD 250,000. The deemed deduction is TWD 258,000 (43%). In this case, the deemed deduction (TWD 258,000) is larger, so the standard method is more favourable.
Lease Income Withholding and Reporting
- Withholding by the tenant: If the tenant is the "business entity" (the "公司" or the "商號"), the tenant must withhold 10% of the rental payment and remit it to the tax authority (the "扣繳率 — 10%"). The tenant issues the "withholding certificate" (the "扣繳憑單") to the landlord by the end of January of the following year.
- Landlord reporting: The landlord reports the rental income on the annual tax return (the "綜合所得稅結算申報") under the "rental income category" (the "租賃所得" — the "Section 14, Class 5 income"). The 10% withholding is credited against the total tax liability.
- Loss carryforward: If the itemised actual expenses exceed the rental income (the "net rental loss"), the loss may be carried forward for up to 10 years (the "虧損扣除" — the "loss deduction") to offset against the future rental income.