25 Apr How to deduct the rental of a home
Make numbers, not nonsense. Let’s see how you have to declare your income and what you can deduct.
Let’s suppose that we have bought a house for € 100,000 financed with a mortgage and that we rent it for € 10,000 per year (€ 833 / month).
We can deduct the following expenses:
1.- Fees of the agent or lawyer for the formalization of the contract, € 175.
2.- From the signed mortgage we are paying a monthly interest of € 200 / month.
3.- Maintenance expenses can be deduced until a maximum amount of the full income (the excess would be applied in the following four years). Let us assume repair costs of € 250.
4.- The taxes paid by the owner are also deductible. We estimate an IBI of € 300, a waste collection tax of € 20 and a sewerage tax of € 15.
5 .- If the tenant does not pay the rent and six months have elapsed since the debt, you can deduct the monthly payment pending, for example, € 833.
6.- Community expenses are also deductible, eg. € 350
7.- After time, the house suffers an effective depreciation. To calculate this depreciation, 3% must be applied to the greater of the following values: the cost of acquisition or the cadastral value of the construction of the home, not including the value of the land. If the cadastral value of construction is € 40,000, 3% are € 1,200, deductible value.
8.- Home insurance with a supposed premium of € 150.
Revenue for renting the house: € 10,000
Expenses (175 + 2,400 + 250 + 300 + 20 + 15 + 833 + 350 + 1,200 + 150): € 5,693
Net income: € 4,307
According to personal income tax (PIT) in the lease of real estate for housing, the positive net return is reduced by 60%.
In the example, 60% of € 4,307 are € 2,584.
We conclude then:
Economic performance obtained from the rental of the house is € 1,723