The Treasury has already announced that it will closely monitor the correct statement of rental income. In this chapter, it will pay special attention to holiday homes, i.e. to the taxation of apartments on the beach, rural houses or flats that are rented to tourists on a seasonal basis. Its inclusion in the Income Tax Return has several points of interest that it is necessary to know in order to do it correctly.
In this note we will deal with the most common case: a private individual or couple of owners of a second home who rent for a few days, weeks or months without this meaning any professional activity in the field of hospitality.
This case includes the classic apartment rental on the beach, in the mountains, housing in the city, rural house, etc … from private to private according to Barcelona apartments rental company.
The first thing to bear in mind when declaring is that two clearly differentiated periods must be declared in the same fiscal year:
- a) The period during which the dwelling is rented (full income will be declared and the necessary expenses for renting can be deducted but only in proportion to the days rented)
- b) The time that the house is free and at the disposal of the owners (it will suppose a rent imputed by the Treasury for owning a second house).
The first thing we need to know is that both must be declared.
- How are the days I rent my home declared? Example
It is very important to clarify that these leases do not apply all the advantages of renting for habitual residence and that complying with the Treasury does not exempt you from complying with the regulations of the Autonomous Community, which governs the requirements necessary to rent a house for vacation purposes after the recent change in the law. It is necessary to know that each Autonomous Community has its own regulations for renting a house and it is advisable to know them before renting a holiday home in order not to face possible sanctions.
Once we know that we are going to deal with the taxation of holiday homes without hotel services, we must know that the days on which the housing is rented should appear in the Income Statement as “returns on real estate capital.
The net return to be taxed will be the result of subtracting from the total income the expenses necessary to obtain them. Specifically, you can subtract the IBI, the mortgage interest, the rubbish rate, insurances that cover the risks of the house, community expenses, expenses made to achieve the rent such as that of mediating agencies or advertisements, amortization of the property or of the belongings in it as long as they respond to an effective depreciation and even the expenses of electricity, water, gas, etc.
But watch out, not all the expenses can be imputed in their totality but only in the proportional part to the time in which the property has been rented. In other words, if the property has been rented for a quarter of the year (3 months), we will have to divide all these expenses by four. If it has been 30 days in total, then we can deduct the twelfth part of the expenses and so on depending on the period rented.
There is an exclusion at this point and are the costs of an intermediary agency or advertisements made to achieve the rental, which would be deductible in full.
Let’s see an example of the calculation of the net yield of a holiday rental property rented in 2016 on the beach for 1,000 euros per month during the three summer months. The house had an acquisition cost of 120,000 euros, discounting the value of the land.
– The total income during 2016 would be 3,000 euros.
– The annual IBI is 400 euros.
– The annual interest payment on the mortgage that taxes the property is 1,000 euros.
– The rubbish rate is 100 euros per year.
– Community fees of 30 euros per month.
– The insurance of the house 120 euros per year.
– The agency commission of 160 euros.
– The amortization for 12 months would be 3% on the cost of 120,000 euros of home purchase, 3,600 euros
The net return to be declared in 2017 on Income Tax Return 2016 would be:
Income of 3,000 euros less
– 100 IBI (a quarter of the total amount)
– 250 interest (a quarter of the total amount)
– 25 rubbish fee (a quarter of the total amount)
– 120 community fees (the amount of the three months’ rent)
– 30 insurance (a quarter of the total payment)
-160 agency expenditure (in full)
– 900 depreciation (a quarter of the total)
= 1,415 euros (net yield)
The above example is basic and could be added to it other duly justified expenses directly related to the declared rent, for example if the services of electricity, water and gas are included.