Tax benefits for rental housing
If you want to know what are the tax benefits for rental housing, this post is of interest to you.
If you have a second home (or several) consider it as an investment asset and not only that, but also as a possible PASSIVE INCOME.
If you have it without renting it, not only you are NOT HAVING an income but you are also obliged to TAX for it. That is to say, YES or YES you pay. Whether you receive income from the rent or not.
There are many cases where you have a second residence, or simply the proportional part of a property that you inherited. For the tax authorities it is an “economic capacity” that is to say, it offers you the opportunity to obtain an income.
How is it taxed?
The imputed rent will be 2% of the cadastral value of the property (or 1.1% if this value was revised in the last 10 years).
I REPEAT: if you have a second home, and you have NOT had it rented 365 DAYS OF THE YEAR, you have to apply the “formula” above in the proportional part of the year that it has been “for your enjoyment”.
Economic abundance has several channels through which it can flow, and it is up to you whether you allow it to arrive, or whether you want to obstruct it!
Do you have a property that is rented or did my post help you decide to rent it?
I leave you a summary of what would be the taxation in case of RENTAL and how to obtain your Reduced Net Return on Real Estate Capital.
There can be 2 cases and the taxation is different:
1. TAX BENEFITS FOR RENTING A PRIMARY RESIDENCE
The INCOME obtained from the rent is reduced by all the EXPENSES necessary to obtain it (mortgage interest, maintenance and repair expenses, property tax, insurance, garbage and community fees, amortization of the property).
A 60% reduction is applied to this result if it is the tenant’s main residence.
Ojooo … This reduction cannot be applied if it is a seasonal or vacation rental and if the premises is for a business.
GARAGES AND STORAGE ROOMS
The yield of the parking spaces and storage rooms RENTED TOGETHER WITH THE HOUSING is included in the yield obtained by the latter.
When they are rented separately, they are treated in the same way as any other property (the 60% reduction is not applied because it is not the tenant’s habitual residence).
2. TAX BENEFITS FOR TEMPORARY RENTAL OR AS A TOURIST DWELLING
The treatment is the same as in the case of the usual rental (permanent housing) with the difference that the expenses will be proportional to the time the property was destined to this type of rental.
What does it mean?
That we have to make a rule of 3.
In general the expenses are usually annual (IBI, community, insurance, etc.) so you will have to take into account that you can only subtract from the income received the proportional part of the expenses.
EXAMPLE: The property was intended for tourist rental for 3 months. The expenses would be obtained as follows: TOTAL EXPENSES * 3/12 (MONTHS)
Warning!!! Remember that the 60% reduction can NOT be applied in this case.
And for the remaining time, that is to say, for what is missing until the period of one year is completed, it would be taxed as a second home, also applying the rule of 3.
For this I recommend you to check the beginning of this post where I explained it)!
If you found it useful, don’t forget to share and of course if you have any questions or need guidance, please contact us without obligation.
If you need help with your Income Tax Return, remember that you can count on our help. Request a consultation directly HERE, write us or ask for the procedure directly from the Virtual Store
Leave me a comment below and if you have any questions, don’t hesitate to get in touch!
Thanks for reading me and if you want to be more up to date with what I publish, I recommend you to follow me on Linkedln or Instagram: @carmen.vizireanu
