If you have a flat for rent and your tenant does not pay you, you are obliged to pay taxes for the corresponding part of the income, even if it does not exist, and pay the corresponding amount to the Treasury. But only if it has been less than six months since the default occurred. The Spanish regulation obliges the unpaid installments of a rental contract to be declared as income if no more than half a year has passed since the breach occurred.
Josep Ribó, president of the Official College of Administrative Managers of Catalonia, explains that the month of December is taken as a reference. That is to say in the income statement that is being presented now, the moment in which the date would be considered to count the six months back is December.
Ribó uses a simple example. In the case of a tenant with a rent of 1,000 euros per month who has not paid a single euro in 2022, the owner must declare the 12,000 euros for the whole year but may declare the first six months as a doubtful balance: 6,000 euros. He will obviously pay taxes for the remaining 6,000 euros that have been unpaid for less than six months.
What happens if the tenant finally pays? Ribó replies that it should be recorded as an income in the income of the following year as long as it had obviously been declared as a doubtful balance.
The rental of a property in the income statement is taxed differently if the person who rents it uses it as a habitual residence or not, as in the case, for example, of flats for tourism or rental for days. In the case of real estate intended to be a habitual residence, the regulation allows the income obtained to be reduced by 60%, so only the remaining 40% is taxed. In the rest of the houses, 100% is taxed.
Obviously, in both cases, the expenses inherent to the rental activity must be previously deducted, such as taxes, community expenses, agency management, home improvements and the amortization of the property that is automatically calculated based on the cadastral value. Amortization is a deduction of a part of the value of the property for wear and tear.
The income generated by the rental once purged of expenses and reductions is incorporated as one more income for the taxpayer and is taxed at the same rate as for the rest.
Asked if it is possible to declare a negative income from a rental, Ribó answers that it is, but that it can only be used to reduce the income generated by another property. In no case will it be used to reduce the fee to be paid for salary payments.
An example. If a taxpayer rents a property for a very low price, it is possible that expenses such as mortgage loan commissions, taxes and others, plus amortization, are higher than what it generates. If the negative income is 100 euros and another property generates a positive income of 1,000, the combined income would be 900 euros.
An example. If a taxpayer rents a property for a very low price, it is possible that expenses such as mortgage loan commissions, taxes and others, plus amortization, are higher than what it generates. If the negative income is 100 euros and another property generates a positive income of 1,000, the combined income would be 900 euros.
