How is my house taxed? Personal Income Tax 2021

personal income tax mallorca

Novelties on income for those who own, rent or rehabilitated dwellings.

Like every year, housing is one of the most common assets in each income campaign. Whether they own the property where they usually reside or if they rent a house to third parties, they must declare for this type of property, although there may be some cases where it is exempt.

 

But beyond these, the home must be included in the Income Tax return for information purposes, even if it is a habitual residence and does not generate income.

 

This year’s novelties include the deductions of the rent reductions applied by small holders (up to 10 properties) in their properties as a result of the Covid crisis and also the bonuses for residential rehabilitation.

On the other hand, the obligations of other years are maintained, such as the impossibility of deducting the purchase of a home if it has occurred after 2013.

 

NOVELTY:

wners who needed a mortgage to be able to afford the purchase can deduct both the capital of the loan and the expenses related to the insurance associated with the mortgage itself, such as life insurance. The limit of the base on which the deduction is calculated is 15% of what has been paid in the year for the home over a maximum of 9,040 euros.

Also, the amounts destined to carry out works and adaptation installations of the taxpayer’s habitual residence «due to disability» can be deducted.The limit is €12,080 per year.

It is important to take into account the houses that function as a second residence. In this case, the assets function in the declaration as if they were one more income that adds to the rest of the taxpayer’s income.

The amount is calculated from the cadastral value of the property and the proportion of it that belongs to the taxpayer in question.

It should be remembered that the habitual residence is exempt with a maximum amount of 300,000 euros in wealth tax. The exemption will be applied by the taxpayer who has the right of ownership, full or shared, real right of use or enjoyment over the habitual residence, such as usufruct, use or the right over a room.

 

RENT:

The income generated thanks to the rental of a property must also be included in the income tax return. In this case, all the expenses necessary to obtain the rent can be deducted, up to the limit of the income obtained. Some examples are: the real estate tax, home insurance, community expenses or municipal fees for the garbage collection service.

However, as occurs with the rest of the property owned, in these cases it is also necessary to declare for the part of the property that belongs to the taxpayer both the income obtained and the expenses incurred.

And what about the tenants? As a general rule, at the state level, all tenants with contracts prior to the year 2015 may apply reductions of up to 10.5% for the rental income, with the exception that the base does not exceed 9,040 euros.

*As a novelty, all those lessors who are not large holders, «will be able to deduct the rent reduction that they have voluntarily applied to their rented premises as a result of the Covid-19 health crisis”.

TOURIST RENTAL :

Tourist or seasonal rentals are not taxed in the same way as other rentals. The returns derived from tourist rental without additional hotel services are, in general, returns on real estate capital. In the event that the owner has at least one person employed with a full-time employment contract to carry out the activity, the income obtained from the tourist rental will be considered income from economic activities.

On the other hand, when a tourist apartment is rented, it is possible to offer a series of complementary services, such as, regular cleaning of the property, laundry services, luggage storage, etc., if these services that are provided are typical of the hotel industry. , the income obtained from the rental is considered income from economic activities.

SALE:

The sale of the home is taxed as a capital gain due to the difference between the sale price and the purchase price. The rate ranges between 19% and 23% until 2020, and up to 26% from 2021. Expenses paid for the sale of the property may be included, such as property registration, notary, eventual agency commissions real estate etc.

The sale, however, is exempt if the previous owner is over 65 years old or if with the money obtained from the transaction, he buys another habitual residence within two years.

REFORMS:

One of the most important novelties this year are the deductions for having carried out rehabilitation works designed to improve the energy efficiency of the property.

It should be remembered that, although they come into force in this campaign, only interventions that began on October 6 can enjoy this aid.

For works in the main residence that reduce the demand for heating and cooling by 7% (it can be achieved with high-performance windows), a 20% deduction is opted for, with a maximum of 5,000 euros per home.

Those that reduce non-renewable energy consumption by 30% or improve their energy rating to A or B may benefit from a 40% deduction, with a maximum of 7,500 euros. A deduction of 60% and a maximum of 15,000 euros is reached for energy rehabilitation actions in residential buildings where consumption falls by 30% or certification A or B is achieved.

As a novelty, in the case of those affected by the volcano of La Palma, the right to regional deductions in personal income tax linked to the habitual residence is maintained, without prejudice to those that have been destroyed by lava.

Would you like us to advise you on how to file your 2021 tax return? We can do it for you! For only 30€ and if you are self-employed 70€.

What are you waiting for? Get in touch with us.

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Moya&Emery Asesores y Abogados

Moya&Emery Asesores y Abogados

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