Jump to content

Best allocation between salary and housing allowance?


Recommended Posts

OK, I'm moving back to Tokyo in a month or two. Got another company job.

 

They offered me a salary amount, then said that I can designate a portion of it as housing (rent) allowance.

 

I believe this has tax consequences, but I'm not exactly sure how. Anyone got advice on how to handle this?

 

Could it be that the housing allowance part is not taxed as salary/income?

 

wakaranai.gif

Link to post
Share on other sites
 Quote:
Originally posted by badmigraine:
OK, I'm moving back to Tokyo in a month or two.
****ing idiot.

;\)

They will 'gross-down' your taxable income by your rental allowance, thus the more you spend on rent, the lower your taxable income and the less tax you pay. This is the same as spending pre-tax cash and being taxed on what is left over.

There is often a cap to this, eg: they offer to pay you gross JPY2,000,000 per month and of that 500,000pm can be allocated to rent. You can spend more on rent, however every yen over 500,000 spent on rent will come from your net income. In this example: assume you spent 500,000 on rent then your taxable income would be 1,500,000 per month and you would pay tax like you were a lower income earner than you actually are. Th etrade off is that you have to spend money on rent to do this.... which is dead money in many respects.

wakarimasu ka

ps - I know of a nice 3 bedroom, 2 toilet and third bathroom, 120sqm, 2 story house going on the rental market in Seijo in... oh,.... a month or two.... (the landlord is also super nice and is happy to let you keep a dog)
Link to post
Share on other sites
 Quote:
****ing idiot.

;\)
*sigh*...

I was hoping you wouldn't say that.

It's a money thing and a childbirth thing (not me, my wife!). It's not going to be the same as the old bachelor days, that's for sure!

At least I had a good run...made it to 40 before getting hitched.

Ta for the tax lesson. Must the portion of compensation designated on my pay slip as "housing allowance" all be spent on rent?

For example, if I tell the company to set my housing allowance at 200 per month, and that is what shows on my pay slip, but I actually only pay 150 per month in rent, is the unused-for-housing 50 still non-taxable?

Put another way, is the determinant "actual rent", or is it "formal allocation on payslip"?

I think on the US side, the entire portion designated as housing allowance might be eligible for the foreign housing exclusion, even if not all used for housing-related expenses...I better check that out on the IRS website.

Cheers! See you all in lovely Tokyo then. Fresh air, open spaces! I can bring my Ford Expedition, right?

" title="" src="graemlins/cry.gif" />
Link to post
Share on other sites

Beat da Man Mikaz, beat da Man.

 

BG - I suspect that your employer will deal with all of this on your behalf, ie they will pay the rent and then calc tax and then pay you. All of this will be on teh pay slip. There may be a chance that all they will want is a copy of your lease and just use that for the monthly rent/tax calculation. If thi sis teh case then cooooool: find a pal that will rent you a place for 150,000 per month yet have him draw up a lease for 500,000pm and you get to spend (500,000-150,000)in un-taxed yens (can I say yens? it is ok to say dollars or euros or crowns or rubbles or dongs, why not yens?)

 

BTW - Welcome back. Married, kid.... not all bad stuff I am sure. Good luck with life back in Tokyo.

Link to post
Share on other sites
 Quote:
Originally posted by d=(^o^)=b:
find a pal that will rent you a place for 150,000 per month yet have him draw up a lease for 500,000pm
For a portion of the monthly unused amount I offer you my services. ;\)

Still trying to work the tax thing out myself for rent, but as far as I can see on my payslip there appears to be no relation to the actual amount spent and the amount allocated as regardless the tax ratio on this amount and on salary amount appears to the be the same. In other words there seems to be no clear benefit in having the amount listed as rent on ones pay slip. Eargerly ready to be proved wrong however.
Link to post
Share on other sites

I wont be proving you wrong. I am still confused by my payslip and not prepared to raise the topic with my HR department in case they realise that all the time they have been making a monthly error and paying me way too much.

Link to post
Share on other sites
×
×
  • Create New...