Real estate yields in personal income tax.
What are RETURNS ON REAL ESTATE CAPITAL ( Art. 22.1 Income Tax Law).
Those derived from the lease or from the constitution or transfer of rights or powers of use or enjoyment over rural and urban real estate or real rights that fall on them, whose ownership corresponds, are considered full returns on real estate capital. to the taxpayer and are not affected by economic activities carried out by the taxpayer. Ownership, full or shared, of the right of ownership of real rights of enjoyment over real estate that are not leased or assigned to third parties , nor are they affected by economic activities , does not generate income from the property . real estate capital, but rather gives rise to the application of the special regime for allocation of real estate income , with the exception of the habitual residence, unbuilt plots and properties of a rustic nature.
Some examples of how the following concepts are taxed in personal income tax:
1 . Real estate lease as return on real estate capital
Yields derived from the leasing of real estate are considered yields from real estate capital , unless the lease is carried out as an economic activity. For these purposes, it is understood that the leasing of real estate is carried out as an economic activity when at least one person employed with a full-time employment contract is used for its management ( A rt . 27.2 Law personal income tax).
In this case , the amounts obtained are not considered income from real estate capital, but from economic activities , within which specific section they must be declared.
2 . sublease
In the case of subleases , the amounts received by the sublessor are considered income from movable capital [Art. 25.4.c) Personal Income Tax Law).
However, the participation of the owner or usufructuary of the property in the price of the sub lease is considered as income from the real estate capital , without it being appropriate to apply the reduction for the lease of real estate destined to the net income. housing , established in article 23.2 of the Personal Income Tax Law, which is discussed later .
3 . Leasing of businesses or mines
The amounts received for leases of businesses or mines have the tax consideration of income from movable capital [Art. 25.4.c) Personal Income Tax Law]. However, if the lease is only for business premises , the yields obtained must be classified as real estate capital and quantified by applying the rules.
4 . Compensation for early termination of the lease _ _
The indemnity paid as a consequence of the early termination of the lease is considered by the owner-lessor as an improvement and not the deductible expense for determining the net return on real estate capital.
For the lessee who receives it, it constitutes a capital gain whose generation period will be the one that corresponds based on the age of the lease .
5 . Property with simultaneous use or dedication or in the same period ( leased and available to its owners )
When a property is subject to different successive or simultaneous uses in the same tax period, that is, leased for part of the year and the rest available to its owner, the income derived from the lease constitutes income from the real estate capital and that corresponding to the period not leased or the part not leased is considered income imputed by the ownership of the property , provided that it does not become the taxpayer’s habitual residence .
The amount of the yields and of the imputed rent will be determined in proportion to the number of days that the properties have been contracted or leased or without leasing , respectively, within the fiscal year.
6 . The lease of common elements of a building
The leasing of common elements of a building, such as, for example, part of the façade or the roof, by the community of owners giving rise to real estate capital yields that will be attributed to the co-owners according to their participation in the community.
Source: Spanish Tax Calculator