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Practical manual for Income Tax 2020.

Example: Real estate income allocation

Mr. JVC, during 2020, has been the owner of the following real estate properties:

  • Primary residence, whose unaudited cadastral value amounts to 34,800 euros.
  • Parking space acquired together with the property and whose unaudited cadastral value amounts to 3,900 euros.
  • Apartment on the beach that is only used during the month of vacation. The cadastral value of the same, which was revised with effect from 2012, amounts to 40,800 euros.
  • Apartment purchased for 105,000 euros on 1 July 2020 and rented for a monthly rent of 600 euros on 1 September of that year. As of December 31, 2020, the property's cadastral value has not been notified. The value declared by the taxpayer for the purposes of the Tax on Property Transfers and Documented Legal Acts is the acquisition value, without the tax authorities having proceeded to modify it.

Determine the allocation of real estate income corresponding to said properties:

Solution

  • Primary residence and parking space: no imputation of real estate income is applicable.

  • Apartment at the beach. Imputed real estate income:

    1.1 per 100 s/40,800 = 448.80 (1)

  • Apartment acquired in 2020. Imputed real estate income:

    1.1 per 100 s/(50% x 105,000) x 62 ÷ 366 = 97.83 (2)

Total imputed real estate income (448.80 + 97.82) = 546.63

Notes to the example:

(1) Since the cadastral value was revised in 2012, that is, within the ten years prior to 2020, the percentage to be applied is 1.1%. (Back)

(2) Since the owner has not been notified of the cadastral value of the property as of December 31, 2020, the percentage of 1.1% is applied to 50% of the acquisition value of the property, a value that has not been modified by the Administration for the purposes of the Tax on Property Transfers and Documented Legal Acts. Furthermore, the imputed income must be determined in proportion to the number of days that the property has been available to its owner (from July 1 to August 31). Finally, the income derived from leasing the property is considered to be income from real estate capital, in which section it must be declared. (Back)