Clearing accounts with the Treasury can become a cumbersome procedure for individuals who rent apartments. In the current rent campaign, the 60% reduction in the net income obtained from having permanently rented homes is still applied, a percentage that will generally decrease to 50% starting with the 2024 rent, although there are certain assumptions which can lead to confusion and end in a fine.
One of those that most easily leads to error is non-payment. The rents for the months that the tenant owes must be included in the declaration as income from the real estate capital, “since these rents are attributed to the tax period in which they are payable by the landlord,” clarifies José M. Mollinedo, general secretary of the Technicians of Treasury (Gestha). However, unpaid installments will be “deductible” if more than six months have passed between the first collection process carried out by the lessor and December 31, 2023.
Therefore, a landlord to whom his tenant has not paid the rent during 2023, and claims each and every one of the unpaid installments from the first month, must declare the rental income for the 12 months and deduct as an expense the doubtful collection balances for the amount of the installments of the first six months. If these ended up being received after the deduction, “it would be computed as income in the year in which said collection occurred,” responds the General Directorate of Taxes in a binding query.
In 2023 income, 60% of the net income can be reduced in homes intended for permanent rental, so only 40% of the income will be taxed, discounting rental expenses that are not borne by the tenant. To obtain the net return, the expenses of financing the mortgage, repairs and conservation of the property, community, insurance, garbage rate, as well as the services of lawyers, advisors, supplies, IBI and depreciation of the property must be subtracted.
Another deductible expense is amortization for the wear and tear of the home, the loss in value that the property suffers over the years, and is calculated from the cadastral value of the building. In the case of the total amount to be deducted regarding the financing and repair and conservation expenses of the property, “it cannot exceed, for each asset or right, the amount of the full income obtained.” That is, they cannot give rise to losses, although the excess may be deducted in the following four years.
It must be taken into account, explains the Spanish Association of Tax Advisors (AEDAF), that the right to benefit from the 40% reduction in returns “is only applicable when the taxpayer has voluntarily included the positive return in their self-assessment. ”. That is, before the Administration initiates a data verification procedure, limited verification or inspection to verify the returns from the leasing of properties. “Nor will the reduction apply to those positive net returns derived from income not included or from expenses improperly deducted,” they add.
In addition, it must be taken into account that starting with the 2024 income, the general reduction of 60% is reduced for new rental contracts, becoming 50%, although modalities of up to 90% reduction are established in some circumstances, such as homes located in stressed residential market areas or that have been rehabilitated.
On the other hand, in the Basque Country and Navarra there are differences in the way in which rentals of permanent housing are declared. Thus, for example, in the Basque regime a 20% bonus is applied to the income and only the amount of interest on the financing can be deducted. In addition, income from real estate capital from homes is considered savings income.
In this case, Mollinedo explains, “the loss should be incorporated” into the declaration. And, if there was another rented property that did provide returns, the profit that the latter is generating could be offset. Furthermore, “the negative return would deduct the rest of the ordinary returns,” even if these come from labor income. Therefore, if a taxpayer’s tax base is, for example, 40,000 euros and he has a rented apartment that has generated a loss of 1,000 euros, the tax base would be 39,000 euros.
No. In the event that the apartment has been rented for only part of the year, only the expenses corresponding to that period can be deducted, such as IBI or garbage. The same happens with the interest on the mortgage loan -if there is any-.
Regarding tourist or seasonal rentals, although the net income is taxed on the income in its entirety, it is possible to deduct the expenses “with the same criteria that govern the rental of housing on a regular basis by the tenant,” they detail from Gestha.
