Personal Income Tax Renting out houses is one of the key areas undergoing significant adjustments in the tax system reform roadmap starting in 2026. According to the Personal Income Tax Law of 2025, the taxable revenue threshold for individuals engaged in business activities in general, and specifically for renting out rooms, has been significantly raised to alleviate the financial burden on low-income individuals.
Understanding the regulations regarding personal income tax on rental properties not only helps landlords comply with the law but also provides a basis for financial planning and optimizing operating costs. With the emergence of... VAT Law 2024 and Resolution 198/2025/QH15, Traditional tax calculation methods, such as lump-sum tax, will gradually be replaced by declaration-based methods, requiring professionalization in tax management. Let's analyze these changes in detail with MAN – Master Accountant Network in the article below.
Important legal basis related to personal income tax on rental properties, applicable from 2026.
Before delving into the tax calculation methods, we need to establish the legal framework that underlies these taxes. The regulations on personal income tax for rental income and value-added tax (VAT) are based on:
- Personal Income Tax Law 2025Regulations regarding the tax-exempt revenue threshold, tax rates, and methods for calculating taxable income.
- Value Added Tax Law 2024Determine the VAT rate of % on revenue for accommodation and property rental services.
- Tax Administration Law 2019Regulations regarding tax declaration currency, prohibited acts, and tax administrative procedures.
- Resolution 198/2025/QH15: Terminate business license fees and abolish the lump-sum tax method for household businesses from January 1, 2026.
- Circular 40/2021/TT-BTC: List of business sectors and applicable tax rates (remains valid for reference until a new circular replaces it).
Personal income tax on rental income and new revenue thresholds from 2026.
From January 1st, 2026, the revenue threshold for exemption from personal income tax and value-added tax on rental income has undergone a groundbreaking change. This is good news for small businesses and individuals who rent out properties on a small to medium scale.
The tax-free threshold has been increased from 100 million to 500 million VND per year.
According to Clause 1, Article 7 of the Personal Income Tax Law 2025, resident individuals engaged in production and business activities with annual revenue from 500 million VND or less They are not required to pay personal income tax. Compared to the previous level (100 million VND/year according to Circular 40/2021/TT-BTC), this is a significant step forward in supporting individual businesses amidst inflation and rising living costs.
Eliminate lump-sum taxes and business license fees.
An important point to note is that from 2026, the business license fee will be officially abolished according to Resolution 198/2025/QH15. At the same time, the "lump-sum tax" method will no longer be applied. Individuals with annual revenue exceeding 500 million VND will be required to switch to the self-declaration, self-calculation, and self-payment method for personal income tax on rental income.
Detailed explanation of how to calculate personal income tax and value-added tax for rental income.
For lodging rental activities (classified as accommodation services), the tax rate and calculation method are divided into two cases based on revenue and the taxpayer's choice.
Value Added Tax (VAT)
According to the 2024 VAT Law, the activity of renting out rooms falls under the category of "Services and construction without material procurement". The rate VAT based on revenue 5%.
Recipe:
| VAT payable = Total annual revenue x 5% |
Personal income tax (PIT)
Calculating personal income tax on rental income from 2026 onwards becomes more complex due to the differentiation in revenue:
Case 1: Revenue from over 500 million to 3 billion VND/year
Individuals can choose one of the following two calculation methods:
- Method A (Based on revenue exceeding the threshold):
Personal income tax amount = (Total revenue – 500,000,000) x 5%
Advantage: Simply put, no proof of input costs is required. - Method B (Calculated based on taxable income – Net Income):
Personal income tax amount = (Revenue – Reasonable expenses) x 15%
Note: This option should only be chosen if actual expenses (repairs, utilities, management, etc.) account for a very large proportion of revenue.
Case 2: Revenue from over 3 billion to 50 billion VND/year
It is mandatory to calculate tax based on taxable income (Revenue minus expenses) at the applicable tax rate. 17%.
Case 3: Revenue exceeding 50 billion VND/year
Mandatory calculation based on taxable income at the applicable tax rate. 20%.
| Annual revenue | VAT | Personal income tax on rental income (Popular choice) | Total tax rate |
| $\le$ 500 million | Tax Free | Tax Free | 0% |
| > 500 million – 3 billion | 5% on revenue | 5% on revenue exceeding 500 million | ~ 10% |
| > 3 billion - 50 billion | 5% on revenue | 17% on taxable income | In reality |
| > 50 billion | 5% on revenue | 20% on taxable income | In reality |
Regulations regarding the currency for tax declaration and payment.
Compliance with regulations regarding currency is mandatory to ensure transparency in the management of personal income tax for rental properties. According to Article 7 of the 2019 Tax Administration Law:
- Main currency: The Vietnamese Dong (VND) is the official currency for declaring and paying taxes.
- Foreign exchange transactions: If an individual rents out property in foreign currency (commonly seen when renting to foreigners), the amount must be converted to VND according to the actual exchange rate at the time of the transaction.
- Accounting: Invoices and supporting documents must be in VND or have an equivalent value to facilitate the settlement of personal income tax for rental income.
Prohibited behaviors in tax administration from 2026
To avoid legal risks and administrative penalties, landlords need to pay special attention to the 8 prohibited acts under Article 6 of the 2019 Tax Administration Law:
- Collusion and tax evasionColluding with tax officials to falsify revenue in order to reduce taxes. Personal income tax on rental income.
- Incomplete declarationDeliberately omitting deposits and related service fees from the accounting records to lower taxable revenue.
- Using illegal invoicesBuying and selling invoices to legitimize input costs when choosing to calculate taxes using the income method.
- Obstructing the performance of official duties.: Uncooperative when tax authorities inspected the property.
- Selling goods without issuing invoices.From 2026 onwards, the shift to a mandatory declaration method will require the use of electronic invoices for each revenue transaction.
Conclude
The personal income tax on rental income in 2026 offers many benefits regarding tax exemption thresholds but also poses challenges in terms of documentation procedures. The transition from a lump-sum tax to a declaration-based method requires landlords to have knowledge of accounting, invoice archiving, and periodic tax settlement. To ensure legal safety and optimize tax payments, support from experts is essential.
MAN – Master Accountant Network proudly stands as a leading provider of comprehensive solutions in accounting. auditing services, tax accounting, tax consulting services and tax settlement. We help our clients accomplish these tasks. tax reporting Professional, ensuring practical application and absolute compliance with the latest legal regulations of 2026. Let MAN be your partner in achieving financial transparency and protecting your legal rights before the tax authorities.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Personal Income Tax on Rental Properties
Your total revenue is 600 million VND/year (> 500 million). Therefore, you must pay personal income tax on the excess amount (100 million) and VAT on the entire 600 million.
Reasonable costs include: Regular repair and maintenance costs; electricity, water, and internet costs (if paid by the landlord); land tax; bank loan interest for building the rental property; and brokerage fees for finding tenants.
In addition to being required to pay the outstanding tax amount, you will also have to pay a late payment penalty (0.031 TP3T/day) and an administrative fine ranging from 1 to 3 times the amount of tax evaded, depending on the severity of the violation. If I own two rental properties, each generating 300 million VND in revenue per year, do I have to pay taxes?
Which expenses are deductible when calculating personal income tax using method 15%?
What are the penalties for not paying taxes?
