Deductible expenses for landlords when renting a luxury home

Renting out a property is one of the most common choices among property owners who wish to make their assets profitable. This decision allows them, in addition to earning a monthly income, the opportunity to claim certain expenses on their Income Tax return. Which expenses can be deducted when renting a home? We provide a compilation of the most common ones.

Deductible expenses when renting a luxury home

Regardless of your status as the owner, the Tax Agency identifies essential expenses that can be claimed as deductions from rental income. Due to the diversity of categories and complexity in their management, it is advisable to maintain a detailed record of the following invoices associated with each deduction.

Furniture and appliances

These items are deductible if they are considered part of an annual depreciation equivalent to 10% of the total value, for a maximum of twenty years. It is necessary to justify their lifespan and continuous use for a period exceeding one year.

Costs of maintenance and/or repairs

Renovations that involve painting, fixing installations, or replacing certain elements are included under this category. The deduction for these types of works is equivalent to the rental income, and any surplus can be applied in the four years following the invoice date.

Levies

Some of the local taxes eligible for deduction include: - Payment of the Property Tax, IBI. - Sewer fees. - Garbage collection fees. - Lighting fees.

Insurance premiums

Home-related insurances are considered eligible for discounts as long as they are paid by the owner. The main coverages include: · Liability insurance. · Robbery. · Fire. · Glass breakage.

Amounts accrued by third parties

Extraordinary services provided to the property or community, such as those offered by property managers, security companies, gardening, or facility maintenance. If they represent a shared expense among multiple owners, each can deduct the corresponding portion based on their ownership coefficient.

Real estate agency expenses

The service of a real estate agency can be considered an expense if it provides a specific service such as: - Tenant management and search. - Negotiation with the owner. - Collection management and building improvements.

Supply costs

When the services are in the owner''s name, but the tenant pays for consumption directly via direct debit, only the owner can deduct the total amount billed.

Depreciation

Depreciation of 3% is allowed for one of the following expenses, and the value of the land is always excluded: · Property acquisition cost. · Cadastral value.

Financing expenses

These outlays include the interest associated with the mortgage when acquiring the property, mortgage loan guarantees, notary and agency fees, among others.

Energy certificate

The cost of the energy efficiency certificate may be deductible on the Income Tax return if it is considered part of the compensable expenses in the lease.   In addition to the deductions mentioned earlier, in the case of a rental contract that includes a parking space or storage unit, the owner can deduct from taxes the expenses related to their maintenance, such as cleaning, utilities, and relevant insurance, but only if they are billed separately from the main residence.

Why choose ATIPIKA to manage your rental?

ATIPIKA is a luxury real estate agency with over 25 years of experience in the industry. Our extensive track record has positioned us as a leader in the high-end real estate sector. Our services are characterized by being comprehensive, multilingual, and entirely personalized, offering total assurance and confidence to our clients. We are committed to ensuring the maximum profitability for your property, always recommending fair prices to facilitate its rental in the shortest possible time. We have a wide client portfolio, including national and international clients, individuals, and corporate clients. Do not hesitate to visit our real estate offices in Barcelona, Castelldefels, or Menorca to receive the exclusive and professional attention you deserve.