Currently, renting an apartment is very common in Spain, both for those looking for a place to live and for owners who want to generate income from their investment. For this reason, correctly declaring rental income from an apartment must be a fundamental part of this process, and something everyone should consider. In this article, we will guide you through the most important aspects related to declaring rental income, legal requirements, and the tax implications involved.
It's important to remember that in Spain it is a legal obligation to declare rental income from an apartment or dwelling. The Tax Agency (Agencia Tributaria), which is the regulatory body, can financially penalize you if they discover you have earned rental income and have not declared it.
On the other hand, by declaring legally, you gain access to various tax deductions and benefits, which will significantly reduce the amount of euros you will eventually pay to the government. In this way, declaring rental income from an apartment will always result in financial benefits and peace of mind.
With the help of the Tax Agency's Form 100, you can file your annual income tax return. To do this, you must record all income obtained from the rental. These are the steps to follow:
This involves collecting information about the tenants, the rental income received, and the expenses incurred.
There are two options: the general and the simplified. The general declaration offers options for deductions.
On this form, you must reflect the income and expenses related to the rental.
You have the option to do it through the Tax Agency's website.
Pay attention to the submission deadline; remember that the income tax campaign starts in early April and ends in late June. Submitting it late will incur surcharges.
You need to gather documentation supporting your income and expenses to correctly file your rental property tax return. The following list will guide you in collecting the most relevant documents:
1. The rental agreement. This document outlines the rental conditions, the monthly payment amount, and the contract's start and end dates, among other details.
2. Payment receipts. It's important to keep all receipts that confirm the tenants' monthly payments.
3. Expense invoices. This refers to expenses for basic services, such as water, electricity, gas, home insurance, or community fees.
4. Bank statements. These show rental payment and expense transactions.
5. Previous tax return. Have last year's tax return readily available.
6. Withholding tax certificate. If you withhold taxes from the tenant, you must have this document.
Remember that all this documentation must be kept for at least four years, as the Tax Agency may request it in case of an inspection.
If you have a shared apartment, you must declare it following the same process as if the entire apartment were rented out, but with some specific considerations depending on the distribution of income and expenses; in other words, you must determine your share of the income and do the same with the expenses.
For example, if you rent one or two rooms in a property, you must declare the proportional amount you received from the total rent; similarly, you must do the same with the expenses incurred in the apartment. In this case, divide the expenses by the number of rooms or according to the agreement you have with your tenants. The key here is transparency and good communication among all parties involved.
As mentioned earlier, declaring a rental property allows for the deduction of property-related expenses. Doing so reduces the taxable base, and consequently, the amount of euros to be paid.
Below, we list some of the most important deductible expenses:
If you took out a mortgage to acquire the property, the interest is deductible.
You can deduct the fees paid to the homeowners' association. This refers to common expenses, such as maintenance of swimming pools, elevators, cleaning, gardens, and security.
You can deduct these expenses if they are not paid by the tenant: water, electricity, gas.
Property insurance expenses are also deductible.
If the property owner covers repair costs, these can be deducted. This includes electrical repairs, painting, renovations, plumbing repairs, tree pruning, among others, provided you have invoices to support the expense.
You can deduct the cost of hiring a professional to help you with your tax return. This also includes legal fees for lawyers and legal advisors in the event of a lawsuit.
You can deduct a percentage of the property's acquisition value over time, which is typically 3%.
The municipal fees and taxes you pay on the property, such as IBI, are also deductible.
By knowing which expenses you can deduct, you can optimize your annual tax benefits.
It is expected that for the 2024 tax return, deductions will continue to be a maximum of 60% of the income obtained from renting a primary residence. This percentage will vary depending on certain tenant requirements, such as being under 35 years old.
However, as the deduction for investment in a primary residence has been a subject of debate in recent years, and tax legislation may change at any time, it is recommended to consult official sources or tax advisors to stay updated.
Given this question, it's important to know that all property owners who rent out a property, must declare the income received from that rental, regardless of the duration or type of rental contract. In other words, if the property is part of your assets and you earn income from renting out an apartment or room, this must be declared. If you are unsure, it is advisable to consult a tax advisor.
Rental income is declared on Form 100 of the Tax Agency, through the annual Personal Income Tax (IRPF) declaration. This form includes a section for real estate capital gains, where you must include the income earned and deductible expenses from your rental income.
It is recommended to file this declaration via the website, as this method allows for immediate confirmation of the tax declaration and simplifies the correction process in case of any errors.
Committing the offense of omission can lead to serious consequences, such as facing fines ranging from the 50% to 150% of undeclared amounts; additionally, you could be subject to more frequent audits. Furthermore, you would lose the option to access important tax deductions. In summary, not declaring your income can result in a much higher cost than the cost of compliance.
Even if you rent out an apartment for a short period, it's still important to declare it, as all income generated from rent is considered real estate capital income.
However, in the case of tourist rentals, there is an exemption limit. The Tax Agency has an established limit, and you might be exempt from filing a declaration if you do not exceed this limit. If in doubt, it is advisable to consult a tax advisor.
The most commonly used methods and tools by the Tax Agency to detect undeclared rentals are the following:
The Tax Agency compares the tax information provided by property owners with tenant information. It can also cross-reference data with utility companies (water and electricity), municipal registers, cadastral data, among others. This allows for the detection of discrepancies.
In many cases, the Tax Agency receives anonymous reports about undeclared rentals.
Undeclared income paid in cash often raises suspicions and is subject to greater scrutiny.
The use of digital platforms for renting properties (such as Airbnb or Booking) makes it easier for the Agency to access information about transactions that are not always declared.
The best practice is to act transparently and always comply with the obligation to declare your income. If you live off rental income or if you rent out your home, you are obliged to declare it.
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Declaring rental income from an apartment is not only a legal obligation but also a process that will bring you tax advantages and optimize your financial resources, while also providing peace of mind in your role as a landlord. Always consult a professional if you have any doubts, and remember that complying with these obligations contributes to a healthier and more regulated rental market.
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Calera, 3
Funded
100%
598.506,15 €
Target
598.506,15 €
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