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Tax benefits of rent for the Owner and the Tenant

Both the owner and the tenant can opt for a series of rental aids. On the one hand, the landlord is obliged to pay taxes on the income obtained from the rental of his home, but there are certain expenses that can be deducted. In addition, once the deductible expenses have been deducted from the income obtained from the rental, a series of reductions can also be applied that, in some cases, reach up to 100% of the net income.

On the other hand, IRPF laws consider rent relief for tenants who do not exceed income limits. Additionally, municipalities can deduct themselves on a tenant’s income statement as long as certain age and income requirements are met. VERY IMPORTANT: Both deductions can be applied together.

If you are the owner, you can deduct:

  • Interest is accrued on the credit paid for the purchase of the home.
  • State taxes and fees affecting income or housing: IBI, cleaning fees, garbage collection or lighting, Ford and community

 

Fees – Rental formalization fees and legal defense fees

  • Maintenance, maintenance, and repair costs (excluding amounts earmarked for extensions or improvements to the home): paint and other cosmetic repairs; repair or replacement of defective elements such as windows, heating or electrical installations.
  • Insurance contracts (civil liability, fire, theft, glass breakage, or other similar ones).
  • Amounts allocated to services or supplies (electricity, water, gas, telephone).
  • Amortization of the property and the assets it contains (approximately 3% of the building value due to its wear and tear) – Management fees, garden care, supervision, concierge services, and other services related to the property.

 

You have reductions:

  • 100%: If the tenants are between 18-30 years old and their net income is higher than the public indicator of multiple effects income (IPREM), or if the tenants are between 18-35 years old, their net income is higher than the IMPREM and the rental contract is prior to 01/01/2011.
  • 60%: In all other cases. Read Tax Benefits of Rental Property.

 

In order to apply this reduction, the tenant must submit a communication to the owner indicating the following information: Name, surnames, DNI, fiscal address, Cadastral Reference, and indicating that he meets the aforementioned requirements. It should be noted that these reliefs do not apply to all rents. Vacation rentals or tourist seasonal rentals are exempt. Also does not include rental with food service. Since the period between September and June was deemed long enough to decouple it from seasonal leases, these reductions were considered for housing rented to students.

 

If you are a tenant, you have deductions:

  • State without age limit: taxpayers whose maximum Tax Advantages of Rental Property base does not exceed $24,107.20 may apply a deduction of 10.05% of the amounts paid for rent, taking into account a maximum limit that varies depending on your tax base, and maybe:
  • When the tax base is equal to or less than 17,707.20 euros per year: 9,040 dollars per year.
  • When the tax base is between 17,707.20 and 24,107.20 euros per year: 9,040 euros less the result of multiplying by 1.4125 the difference between the tax base and 17,707.20 euros per year.

Autonomous with an age limit: Each Community has its own deduction and it is necessary not to exceed a certain age or a volume of income to be able to benefit from it. for example, in the community of Madrid, tenants under 35 years of age can deduct 20% of the amounts they have paid during a tax period for the rental of their habitual residence, up to a maximum of €840. The requirements for this deduction to be applied are: Being under 35 years of age on December 31. That the tax base of the tax period is not higher than $25,620, in individual taxation, or $36,200. If it is joint taxation, that the amounts paid for the rental of the habitual residence exceed 10% of the tax base of the tenant’s tax period; and finally,

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