The tax return is an annual process that all taxpayers must go through to settle accounts with the tax authorities. For those involved in the rental market, whether as tenants or landlords, understanding how to correctly declare this income or expenditure is crucial.
In this article, we explain in detail how to do this for the 2025 tax year.
Key changes in the new 2023 housing law
Before going into how to include rent in your tax return, you should be aware of the changes implemented by the new housing law of 2023, which are as follows:
- Reduction in general deductions: For contracts signed before 1 January 2024, the deduction is 60%. For subsequent contracts, the deduction is 50%.
- Increase in the percentage reduction in certain cases:
- 90% if the rent is in stressed areas and a price 5% lower than the previous contract is agreed.
- 70% if the rental is to 18-35 year olds in stressed areas.
- 60% if rehabilitation works have been completed in the two years preceding the contract.
For owners
1. Identification of the leased property
Landlords should start by identifying the property they are renting in the relevant property section of their tax return. Be sure to include the precise identification details of the rented property: boxes 0062 to 0075 in the tax return portal.
2. Full rental income
In box 0102, you must declare all your full rental income in 2024. This includes:
The total of the monthly payments received.
Any amount received for additional services (furniture, appliances).
3. Deductible expenses
Owners can reduce the tax base by applying certain deductible expenses:
- Mortgage interest: Interest and other costs associated with the financing of the property can be deducted.
- Repair costs: Includes maintenance and improvement costs that do not increase the value of the property.
- Common expenses and taxes: IBI, community expenses are deductible if paid by the owner.
- Depreciation of real estate and movable property: Up to 3% of the value of the real estate and 10% for furniture and appliances.
4. Tax Deductions
Homeowners may benefit from deductions depending on certain conditions:
If the property has been rented out as a main residence, they can reduce up to 50% - 90% of the net profits obtained, depending on the conditions stipulated by the new law.
For tenants
1. Regional deduction
Most of the rent deductions for tenants correspond to regional deductions. Each region has its own conditions and deduction limits. Be sure to check the specific requirements in your region.
2. State Deduction (Specific contracts only)
Contracts signed before 1 January 2015 are still eligible for a state reduction of 10.05%, depending on the taxpayer's taxable income.
3. General criteria
- Contract registration: To be eligible for deductions, the contract must be officially registered.
- Age and income: Many deductions apply to tenants under a certain age or with limited income.
Common mistakes and tips
1. Incorrect income declaration
Make sure you declare all income and do not under-report, as this may result in penalties.
2. Documentation and testing
It is important to keep all documentation supporting deductible expenses and be prepared to provide it if required by the tax authorities.
3. Professional advice
If you are declaring rent for the first time, consider seeking guidance from a tax expert to avoid costly mistakes.
Report your rental income or deductions correctly and maximise your tax savings, avoiding problems with the tax authorities. Be sure to consult a tax advisor if you have specific questions about your personal situation.
Frequently asked questions
Can you not declare income from a rented property?
Failure to declare your rental income can lead to penalties of up to 150% of the undeclared amount. Be sure to make use of the 50% deduction to reduce your tax burden when filing.
