If you own an empty home or have given an apartment from your property to a friend or family member, you need to know that this situation should be included on your tax return and what precautions should be taken. In today’s article we talk about imputed real estate income.
What is imputed real estate income?
Imputed real estate income is income that must be included in the IRPF return because you are the owner or holder of a real right of enjoyment over real estate, including timeshare accommodation.
The imputation of real estate income is regulated by article 85 of the IRPF Act, which regulates the types of property to which it applies and the percentage to which it applies. As for the types of buildings and their characteristics are as follows:
Urban real estate not used for economic activities.
Rustic buildings with constructions that are not indispensable for the development of agricultural, livestock or forestry holdings.
Immovable property which does not generate capital income from the leasing of immovable property, businesses or mines or from the creation or transfer of rights or powers to use and enjoy immovable property.
They are not the taxpayer’s habitual residence. Garage spaces purchased together with the property, up to a maximum of two, are considered part of the usual dwelling.
It does not involve unbuilt land, buildings under construction or buildings which, for urban planning reasons, have no use.
Who must declare imputed real estate income?
In addition to the real estate that should be considered in relation to imputed real estate income, it is also important to know who should include these real estate in their tax returns. They are as follows:
Owners of properties that have them available all or part of the year.
Usufructuaries and other persons who have real rights of use or enjoyment over a particular immovable property.
Owners of time-share accommodation according to the period (today weeks or months) that they have to take advantage of the property.
If there are several owners of the immovable property, they must declare the imputed income all of them in their declaration of income according to the percentage of participation they have in the immovable property.
How is the imputation of income calculated?
The following percentages are used to calculate imputed real estate income:
Overall percentage of 2% on the cadastral value of the property. The cadastral value is that shown on the IBI receipt.
Percentage for specific cases of 1.1%. It applies in the following cases:
Immovable property the cadastral values of which have been revised, modified or determined by a collective valuation procedure of a general nature and have entered into force during the tax period within the 10 previous tax periods.
How is imputed real estate income included in the income tax return?
The real estate imputation of income is included in the section of the income tax return called “Real estate not used for economic activities”. This section includes data on the properties that taxpayers own and the use they make of those properties. Generally, the Renta Web application calculates the imputed real estate income automatically, but the taxpayer must remember to include the property in the income tax return.
Questions (and answers) about imputed real estate income
To be clear about the imputed real estate income and the cases that may arise, below, we answer the most frequently asked questions on the subject:
Do I have to include the home in the rent if it is illegally occupied and there is a judicial process in progress?
In the case of empty homes that have been illegally occupied by third parties against the will of the owner, if the judicial eviction procedure has been initiated, the home will not be included in the income tax return. It is not necessary that a court ruling has been obtained, simply that the procedure is ongoing and can be demonstrated.
I am the owner of a surface right over a property: do I have to declare the allocation of income?
If the real estate is not a habitual residence nor is it subject to an economic activity nor does it generate income from real estate capital, it will have to be included in the income tax return as imputed real estate income.
Can any expenses be deducted from the imputed real estate income?
No, the applicable regulations do not contemplate the deduction of any expenses.
I have a home that I rented for 7 months and then it has been empty but advertised for rent. Do I have to declare the allocation of income for the period that it was empty?
Yes, for the period that the home was empty, since, during that time, the owner had the use and enjoyment of the home.
Should I allocate income in the case of real rights to use real estate in shifts?
Yes. As the owner of the property right, you must allocate income and apply 2% or 1%, depending on the case, to the result of the proration of the cadastral value based on the annual duration of your period of use of the real estate. . If the use has been less than two weeks a year you will not have to apply the imputed real estate income.
Which people should consider the imputed real estate income in their income tax return?
The people who must include the imputed real estate income in their personal income tax return are those who are owners of real estate or real rights of enjoyment over those assets. If the ownership is not proven, the Tax Agency has the right to consider the owner who appears in any tax record or any other public record.
If there is a private home of one of the ex-spouses, whose use and enjoyment corresponds by judicial ruling of separation to the other spouse: should the first apply the imputation of income?
No, since for it to be applied it is necessary that the owner have the power to dispose of the real estate.
If you are the sole owner of a home that is the habitual residence of the usufructuary: must you declare the allocation of income for that home?
No, because, in this case, the imputation of income will correspond to the owner of the real right. But, in this case, furthermore, since the home is the habitual residence of the usufructuary, the imputation of real estate income does not apply.
In short, it is important to analyze each case exhaustively to verify whether income imputation should be carried out or not. If you need help, contact our team of experts and they will analyze your case.
What is a usufructuary in income?
