Spring is on our doorstep and with it comes the declaration of income tax, or as it is called in Spain, la Renta. Every year people wonder: Is rent tax-deductible when it concerns my income tax return? The answer is yes, but you must take into account several requirements before doing so.
For tenants the tax-deductible part of income tax return is divided in two elements: one on a country level (except for Navarra and Basque country) and one on a regional level. So it all depends on the contents of your contract if you can deduct the IRPF of your rental property in your tax return.
In this article we will inform tenants on how to deduct rent in the income tax return, and we will also explain how to declare rental income for landlords.
Our objective is for you to understand how to fill in this part of your tax return, whether you are one party or the other.
Table of Contents
How can you include rent in your income tax return?
So let’s get started. As we already mentioned, there are two parts that are deductible in your income tax return. These are the following:
- State deduction: you can include this in your tax declaration if you have been living in the same rental apartment since before the year of 2017, also if you have renewed your contract or prolonged it. You are allowed to deduct 10.05% of your rent on a maximum amount of €9,040 per year, so there is a maximum of €904 that can be deducted from the rent of the property on your income tax return.
- Regional deduction: every autonomous region decides on its own conditions. In this article we will comment on the ones in Catalonia.
Related article: How Much Does it Cost to Buy and Register a Property in Barcelona?
Declaring the rent of your rental apartment in Catalonia
As we have said, we will help you find out how to deduct rent in Catalonia. If you are living in a rental apartment in Barcelona you need to know that it is possible to deduct 10% of your rent with a maximum of €300 per year, or, if it concerns a family, €600 per year.
To proceed with this deduction, you need to check if you meet the requirements:
- One of the following situations applies to you:
- You are 32 years of age or younger
- You are a widow/widower age 65 or older
- You have been unemployed for more than 183 days (during the tax year it concerns)
- You have a degree of disability of at least 65%
- The total taxable amount may not exceed €20,000 (or €30,000 if it concerns large families)
- The amount paid for rent is more than 10% of your net income
If you match these requirements, you are allowed to declare the rent in your income tax return this year, but remember you can only do this once.
I am a landlord: How do I declare income for the apartment I rent out?
Now that you know how a tenant can declare rent in the income tax return, it’s time to do the same for the landlord.
As with any income or capital gains, it must be declared in your tax return, and rental income is included in box 0102 of the income tax return form.
When declaring the income from the apartment you rented out, it is categorised as income from real estate capital. However, from the income you received for the rental apartment, you as an owner can deduct several aspects that we will explain to you below.
Expenses that are tax-deductible with rent
1. Mortgage interests
If you have taken out a mortgage, you may deduct the interest and commissions paid for early amortization of this mortgage. However, do not confuse this fact with the monthly amount of mortgage you are paying the bank.
📝 Mark this in box 0104 of your income tax return
2. Community fees
You may deduct the property’s community fees. In your tax return you will recognise this as “cantidades devengadas por terceros como consecuencia de servicios personales”.
📝 Mark this in box 0109 of the income tax return
3. Maintenance and repair costs
The most important aspect of these costs is that it must be clear to you what Tax Authorities consider to be maintenance and repair costs, since obviously not all of them will be included. The Tax Agency will agree deducting these costs, as long as you replace a property element for a similar one, and not for a better one.
So you may include the costs of painting, fixing installations (like the heating or boiler, doors, elevators, etc.) as long as you do not replace it with a better, more modern, or updated version of the element.
📝 Mark this in box 0107 of your income tax return
4. Property related taxes
The taxes you pay on the property can be deducted, since they are part of the taxes that you must pay when renting out the property. These taxes are: the Real Estate Tax (IBI), garbage collection, public road lighting and parking space entrances.
📝 Mark this in box 0115 of the income tax return
5. Rental property depreciation
To be clear, you are allowed to deduct 3% of the cadastral value of the apartment. To calculate the tax-deductible part, just find the value and apply the percentage. You will then subtract this amount from your income and know what the depreciation of the property is.
📝 Mark this in box 0118 of the income tax return
6. Depreciation of goods
If you have invested in movable goods (for example household appliances, furniture, installations, etc.), they can also be deducted.
📝 Mark this in box 0117 of your income tax return
7. Home insurance premium
You may deduct several types of insurances: multi-risk, fire, civil liability, glass breakage, non-payment of rent, etc.
📝 You will find this item in the section “Otros gastos fiscalmente deducibles”.
8. Utility costs
If you as the property owner are responsible for paying utility costs (like water, electricity, gas, internet…) you may deduct these in your income tax return.
📝 Mark this in box 0113 of la Renta
9. Unpaid rent
Sometimes you will have a tenant that, unfortunately, will not pay their monthly rent. If this is the case with you, you are allowed to deduct these “saldos de dudoso cobro”. In order to be able to do so, However, the debtor must be declared bankrupt, or at least 6 months must have passed since rent hasn’t been paid.
Remember that if the tenant does pay, you must declare that income in the corresponding fiscal year.
📝 Mark this in box 0116 of your income tax return
Do you still have questions on what is tax-deductible when it comes to rent?
Ask your questions below and we will be happy to answer them!