18 May 2023

How to declare your home in the income tax campaign

Published in Real estate

Both owners and tenants should be aware of the tax obligations involved in owning or renting a property.

April marks the start of the income tax campaign and, as in any tax year, one of the aspects that generates most doubts when it comes to this procedure is the declara:on of the home. Both owners and tenants should be aware of the tax obligations involved in owning or renting a property.

The tax return for homeowners includes the following aspects:

  1. It is necessary to declare the cadastral value of the property, and the income obtained from renting it or from its use, if it has been temporarily rented during the tax year.
  2. If a property has been purchased during the tax year, the amount paid for the purchase and the expenses and taxes associated with the purchase must be included in the tax return.
  3. It is important to bear in mind that deductible expenses related to the main residence, such as mortgage interest or community fees, may be limited according to the tax regulations of the country concerned. It is therefore advisable to seek expert advice on the applicable regulations in each case.

Rental housing

It is essential to bear in mind that declaring a property as rented has tax advantages for both owners and tenants, and also provides legal protection for both parties in case of problems in the tenancy.

If you have a rental property that is used as your main residence, you should declare it on your tax return. However, only those who obtain full income of more than 1,600 euros must declare it as “real estate capital income”. Owners will be able to deduct 60% of the income together with the associated expenses, such as property taxes, utilities and mortgage.

As for tenants, they are not obliged to declare the property in the income tax return. However, it is essential to keep receipts and other documents that justify the payment of rent, as they may be required by the Tax Agency.

Finally, if a tenant makes improvements to the rented property, such as installing an air conditioning system or refurbishing the kitchen, he or she will be able to apply a deduction for investment in the property that will allow him or her to reduce the amount of tax to be paid on the rent.

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