Can I write off my rent for my business?

Lease of business premises

The same case but for a company / SCP whose economic activity is the rental of tourist apartments. Is the annual amortization of the apartments tax deductible or would it only be deductible for the days that they have been rented?

The criterion of deductibility in the scope of the Corporate Tax has been more uncertain, corresponding in each case to the organs of the Tax Administration the evaluation of the proofs contributed by the taxpayer to the effects of accepting or not the deductibility of these expenses.

And in view of this uncertainty, the criterion applied by the Inspection, in general, has been to deny the deductibility of all the expenses incurred in the period in which the properties are not rented, alleging the lack of correlation with the income and applying, consequently, a very restrictive criterion for the taxpayer and lacking in all logic.

However, it is in the field of Personal Income Tax where we see a more specific response to the query raised, specifically in Articles 13 and 14 of the Personal Income Tax Regulation, Royal Decree 439/2007. From its reading, we can deduce that when a property is unoccupied in rental expectations, it is necessary the existence of a correlation between these amortization expenses and the income derived from its subsequent lease.

How is the rental of a business taxed?

The lease of business premises is subject to 21% VAT. The lessor must pass it on to the lessee, and may deduct the VAT incurred as a result of investments or expenses of the premises. Among the lessor’s obligations is the obligation to file a quarterly VAT return, form 303.

How do you declare the rent of a premises if you are a landlord?

If the income is for the rent of a local, when taking the 21% of VAT and 19% of IRPF, the income if you will have to register them in your accounting, assigning them to the IAE 861.2 Rent of Industrial Premises. And you will have to present obligatorily every quarter the Model 303 of VAT.

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How to calculate the depreciation of a rented apartment?

It is very simple, you will have to take into account the acquisition cost of the property and the cadastral value, to the amount that is higher you will have to apply a percentage of 3%. This amount you will be able to deduct it in the Renta, since the amortization is the loss of the value of the property after the passage of the years.

Rental depreciation

That is to say, whether you apply the annual amortization to the calculation of the rental yield or not, the Treasury Department will deduct the accumulated amortization while the apartment has been rented, when calculating your capital gain on the day you decide to sell the apartment. The Law says that the acquisition value will be reduced by the amount of the depreciations, in accordance with the regulations.

And the IRPF regulation says that the acquisition value will be reduced by the amount of the deductible depreciations, “computing in any case the minimum depreciation, independently of the effective consideration of this as an expense”.

What expenses can I deduct as a lessor?

The home insurance could also constitute a deductible expense to calculate the net yield of a rented property. Other taxes such as IBI, garbage collection, or community expenses as long as they are paid by the owner can also be included as deductible expenses.

Who pays VAT on the rental of premises?

Who pays in the case of renting commercial premises?

In this case the tenant is obliged to pay VAT. However, it should be noted that there are certain cases of large companies that are exempt from paying this tax. In addition, it is necessary to emphasize that in this case the IRPF will also come into play.

How much VAT is paid on the rental of premises?

Each month the landlord must issue to his tenant an invoice corresponding to the rent and other agreed expenses and apply 21% to the taxable base of the invoice. The tenant must withhold the 21% VAT paid by the tenant of the premises and pay it quarterly to the tax authorities.

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Deductible expenses in leasing of premises

If you need to manage an inheritance, you can contact our inheritance lawyers, but if you already have the inherited property and wish to rent it, this information will be of interest to you. It also applies to donations. Know all about the amortization of inherited property IRPF

In the lease of real estate, the owner has the right to deduct, as an expense, the amortization of the property at the time of paying IRPF. Specifically, 3% of the acquisition cost of the property (not including the value of the land) can be deducted or, if you prefer, you can deduct 3% of the cadastral value (not including the value of the land). As a general rule, the acquisition cost of a real estate property in a sale is infinitely higher than the cadastral value of the real estate property itself.

As a result of the above, you will be able to intuit that, it will be fiscally more efficient to take as a reference value for the amortization of the property the cost of acquisition, instead of the cadastral value, since the greater the value on which the amortization is calculated, the greater the deductible expense will be.

Where to report rental income?

The rental income must be included in box 0102 of the rent. There, you must put everything that you have received for the lease in full, without any type of reduction and without subtracting any expenses.

When is the rent for a facility paid?

The rent to be paid by the tenant to the lessor for the rental of the premises shall be that agreed upon by the parties in the contract, freely agreed upon by the parties. Unless otherwise agreed, the rent shall be paid monthly and shall be due within the first seven days of the month.

How to calculate the amortization of a loan?

It is calculated by multiplying the agreed interest rate by the outstanding principal (which as we shall see is the fifth column). The interest can be fixed or variable. Amortization of the principal: It is usually in the third column. The amortization consists of the repayment of the loan, excluding interest.

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What do I have to pay if I rent premises

As a freelancer you can deduct various expenses, either in the income tax return or by deducting VAT. This is a very important issue, since savings are key in the activity of the self-employed, especially when starting the activity. It is also possible to deduct the purchase of premises as a freelancer, another important expense, whose deduction will help the economy of the freelancer. Read on and we will tell you more about it.

When you wonder if it is possible not to pay these taxes, it is necessary to think about the waiver of VAT exemption and the inversion of taxable person in the purchase and sale of real estate. If both the buyer and the seller are VAT taxable persons, or if the buyer is going to use the property for leasing, it is possible to pay neither VAT nor ITP.

For this it is necessary to study each case and to see if the regulations governing the investment are complied with. For this reason, the ideal thing is to consult your case with an adviser, so that they can inform you if in your case it is possible or not to deduct in the purchase of a local as autonomous. The saving is important, since 21% or 10% on the purchase of an office can be very high.