How is the rent declared in income tax?

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The state home rental deduction was abolished in January 2015, although it remains in effect for contracts signed before December 31, 2014. However, income earned by the landlord of the home is taxed, including seasonal rentals or vacation This year, since the Treasury has focused on detecting possible rental fraud, we are going to review how the rent is declared in the personal income tax to avoid problems with the treasury.

Rent deductions: does the rent deduct from the 2020 rent?

The landlord must declare the income obtained by renting their real estate as return on real estate capital. From the income received annually, the following deductible expenses must be subtracted:

  • interest on loans associated with the purchase or improvement of the home.
  • taxes like IBI, the garbage fee, the lighting or the ford.
  • community fees
  • the costs of conservation and repair of the house, except for those of improvement or extension of the property.
  • the cousin of home insurance.
  • the amortization of the property, which is 3% of the cadastral value of construction
  • the cost of supplies such as electricity, water, gas and telephone

To the amount that results from subtracting these expenses from the annual income from the rental income a reduction of 60% is also applied to get the performance.

The tenant’s rental declaration

The deduction for the rental of a habitual residence was eliminated in the IRPF reform since January 2015, although it is maintained for tenants with contracts signed before December 31, 2014 or with a new contract that replaces another that had already exhausted the extensions allowed by law. The tenant 10.5% of the rental income can be deducted, with a limit of 9,040 euros per year if the tax base is equal to or less than 17,707.20 euros. The maximum taxable base that entitles you to the home rental deduction is 24,107.20 euros.

What’s more, the tenant can benefit from the autonomic deductions of the rent that are still in force in Andalusia, Aragon, Asturias, Balearic Islands, Canary Islands, Cantabria, Castilla La Mancha, Castilla y León, Catalonia, Extremadura, Galicia, Madrid and Valencian Community.

How is the vacation rental declared?

The income obtained from renting the house a few months a year must be included in the income tax return. Within the vacation rental include beach apartments, rural houses or homes that are rented through the online platforms such as Airbnb, Homeaway, Windu … without constituting an economic activity.

When making the declaration, It is necessary to differentiate the time that the house is rented and when it is empty. In the rental period, the profits obtained are declared as return on real estate capital, which is the result of subtracting deductible expenses from income, limited to the days that the house is rented. You can also deduct the entire cost of the agencies that manage the rental or the advertising carried out to rent the home.

The time that the home is not rented must be declared as a second home. In this case, 1.1% of the property’s cadastral value is calculated, or 2% if it was revised before 1994, and the result is divided between the 12 months of the year. The amount that we must include in the declaration is the result of multiplying the monthly value by the months that the house is empty.

For example, for a house with a cadastral value of 80,000 euros, rented three months a year, the calculation is as follows:

  • 1.1% of 80,000 = 880.
  • This amount is divided between the 12 months of the year 880: 12 = 73.3
  • And finally it is multiplied by the 9 months that the house is empty 73.3 x 9 = 659.7, which is the amount that is included in the return and is taxed according to the tax scale.
  • To this income must be added the amount obtained when the property is rented.

How are the fines from the Treasury for not declaring the rent?

Ultimately, you must declare the income from the rental. Otherwise, the Tax Agency may impose penalties ranging from 50% to 150% of the undeclared amount, according to the degree with which the sanction is qualified.

«This publication is for informational purposes only. In the same way, the client’s taxation and the advice available to him will always be under his full responsibility. Here you can consult the 2016 Income Manual of the Tax Agency. »

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