Calculation of income from the rental of a property (home, commercial premises, garage, holiday apartment)

Deductible expenses

To determine the net income from real estate, taxpayers can deduct from the total earnings all of the expenses necessary for its acquisition, as well as sums corresponding to the depreciation of the building and other goods transferred along with it, provided that these are in accordance with the real depreciation.

Among others, the following are necessary expenses to obtain the returns:

1. Interest and other financing costs of third-party capital invested in the acquisition or improvement of the asset, right or faculty of use or enjoyment, as well as, where applicable, the assets transferred with it.

2. The costs of maintaining and repairing the assets that generate the income. For these purposes, the following are considered:

   • Those carried out regularly for the purpose of maintaining the normal use of material assets, such as painting, plastering or repairing facilities.

   • Those for replacing elements, such as heating systems, elevators, security doors or others.

   Amounts used to expand or improve assets are not deductible under this concept, as they constitute a higher acquisition value whose recovery is carried out through the corresponding amortizations.

   A maximum limit is established for the deduction of interest on foreign capital, financing costs and repair and maintenance costs, which may not exceed the amount of the gross income from each asset or right. Nevertheless, the excess can be rolled over during the four following years, with the same limit for each building.

3. Non-state taxes and surcharges, including property tax, rubbish tax, lighting tax, etc., excluding penalties.

4. Insurance contract premiums

5. Legal defense costs.

6. Amounts allocated to amortization, provided they correspond to their effective depreciation.