Deductible expenses for the owner of a rental property

Can Alonso By Alquilair 

The option of renting a vacation home is becoming more and more common. The objective is usually to achieve extra income in the family economy. If you recently have an empty property you should know the advantages of renting versus selling a property. There are a lot of advantages in the vacation rental sector. The demand for rental housing is increasing every day. On the other hand, the tax benefit for the purchase of housing that was previously available has disappeared. In addition, in recent months, the annual profitability of renting has increased.

However, it is a widespread mistake for some landlords to rent without a contract. This way of proceeding is very risky. But not only that, because without a contract you will not be able to impute the deductible expenses of the rent in your income.

How to deduct home rent if I am a homeowner

Basically, there are two types of tax deductible expenses: The expenses deductible in the IRPF (Personal Income Tax) and the expenses deductible in the IS (Corporate Income Tax), which are those that we pay to develop our commercial or business activity; then, in addition, there is the input VAT when self-employed and companies can deduct the VAT paid in the development of their work.

What are the deductible expenses in the rental of the property for the owner? 

The first thing to bear in mind when declaring the rent of a property is that the two different periods in the tax year must be declared: the time when the property is rented and also the time when the property is free and at the disposal of the owners, which, then, is understood fiscally as imputable income for owning a second home; that is to say, a closed and empty property also generates tax burdens.

Regarding the deductible expenses for rental housing for the owner, the amounts received are reduced by the expenses incurred for the lease and a reduction will be applied to the resulting amount (which may be affected by changes in the taxation of the tax).

Currently, landlords can only apply a single reduction of 60%, and not the totality, to the net income from the rental of housing, regardless of the age of the tenants.

Some of the deductible expenses are:

• Taxes that directly affect the income from the property, of which there are many, such as, for example, IBI, cleaning fees, garbage collection, etc., as long as they are not of a punitive nature.

• Interest linked to the home: either in the case of a home purchase through a loan, or a loan for home improvements.

• Conservation and repair expenses (not for the extension or improvement of the home): These are the expenses we incur with the purpose of maintaining the normal use of the dwelling such as, for example, painting or repairing the installations.

• The amounts allocated to services and other supplies (electricity, water, gas, telephone).

• Lease formalization and legal defense expenses.

• The cost of insurance premiums (civil liability, fire, theft, glass breakage or other similar insurances).

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