Both types of rental have their pros and cons. These are the tax details about rent that owners often ignore, as reported by experts from the real estate platform Housfy.
Of all the differences between the different rental modalities, it is worth noting the duration of the contract, the laws that govern them and the tax implications of each of them.
The rental of a habitual residence – that of a lifetime – is subject to the Urban Leasing Law (LAU) and aims to provide shelter to families permanently and indefinitely. It is possible to update the rents each year, depending on the appropriate price index or specific regulations.
Regarding temporary rental, the Law frames it under the label “rental for use other than housing”. It gives more flexibility to both parties to establish their rules, but the duration is beyond reproach:
It is possible to set rents more freely in each temporary rental contract —and always in accordance with market prices for this modality—, but it is important not to forget its particularities:
The nature of both is exposed when the lessor renders accounts with the Treasury. Let’s compare the two practices in the income statement.
An owner who rents his property as a habitual residence must declare the annual net yield of his rent.
This means that you will need to add up all the gross income for the year and deduct from it all the expenses derived from the rent. Although they may vary each year, the deductible expenses correspond to the following concepts:
With the new Housing Law, which passes on the real estate commission to the landlord, it will also be possible to deduct this expense from the total rental income.
As the apartment serves as the habitual residence of the tenants, the Treasury applies a bonus of 60% on the net income before submitting it to tax. Thus, the amount subject to IRPF (and that would be added to the tax base, together with the salary) is only 40% of the net rental income.
These bonuses may be higher (and reach 90%) with the application of the Housing Law of 2023, if the conditions contemplated in this new regulation are met.
These are, summarized, the points of the declaration of the income of an apartment for rent of habitual residence:
The owner who chooses to rent his apartment seasonally, and at higher prices, must declare the income of all the contracts that occur during the same fiscal year.
The annual gross income of the temporary rental can calmly dazzle those of the regular rental. For example:
And all rental-related expenses can also be deducted, just like before. It will be necessary to take into account, of course, the expenses of this modality. Let’s say:
The temporary rental, on the other hand, does not access any tax reduction, since the property is not the residence of the tenants. Therefore, the owner is required to declare 100% of the annual net rental income.
The higher the amount to be taxed, the more easily the calculation of the IRPF, which is progressive, will go through several sections. The amount to pay in IRPF can triple that of the usual rent.
The Tax Agency also determines an imputation of income for the time that the apartment has been empty. This amount to be paid will depend on the cadastral value and the number of days that the property has been available to the taxpayer.
Let’s see broken down, by way of summary, the aspects of the temporary rental income statement:
It should be left to the reader’s judgment to choose which is more profitable, weighing the challenges of temporary rental and the facilities of regular rental. It is very common that, after all, there is not much difference between the annual net earnings of one modality and the other and, if there is, it would be necessary to analyze how much they compensate according to the situation.
