In court, an individual needs to justify the sources of income, to provide proof of family or friendships with persons living in an apartment (for example, to confirm the friendship it is possible to show photos of past years, an extract from the diploma, confirming the study at a university at a certain time), says Begunov.
"Without a body of evidence of illegal income concealment and non-payment of taxes, the tax authority will not be able to prosecute”, - Mikhail Begunov, managing partner of Tax Compliance.
However, this should not be taken as a protection strategy in case you did get money from the renter, the experts warn.
In situations where the very fact of using the apartment is confirmed by documents or testimony of witnesses, the lack of evidence of receipt of money can do the taxpayer a bad service, said Kazakova. For example, during interrogation an offended renter may give numbers that are very far from reality. When calculating your tax liabilities, the tax authority can use the data on market prices for renting such real estate in your city, and these prices may be much higher than those agreed by the owner with the renter, she explains.
It is believed that the absence of an agreement and the payment only in cash make the income "unproven", but this is not exactly the case, the experts warn.
If there is no agreement with the renter, it will be harder for the tax authority to prove the fact of tax evasion, says Begunov. However, a set of other identified evidence of income will serve as a basis for assuming wilful intent in the actions of an individual to conceal income (including failure to draw up a written contract), and the fine will increase from 20% to 40%, he warns.