Housing landlords have to pay tax on income received from the rental. However, there are certain deductible expenses, and also can apply a series of reductions, of up to 100% in the case of tenants under a certain age limit.

The amounts received by owners of rental housing in income tax are taxed as income from real estate. However, the amounts received are deducted expenses that can be deducted from the lease and the resulting amount will apply a series of reductions, which can reach 100%.

Deductible expenses

Are deductible expenses arising from the rental of property:

• The interest caused by loans that are paid for the purchase of housing.
• The taxes that impact on yields or on housing.
• The lease arrangement expenses and defense of a legal nature.
• The cost of maintenance and repair (not including supplies intended for the expansion or improvement of housing).
• Contracts of insurance (liability, fire, theft, glass breakage or other similar services).
• The amounts for services or supplies (electricity, water, gas, telephone).
• The amounts allocated to the repayment of housing, provided that it complies effective depreciation. It is calculated by applying the percentage of 3% of the greater of the following values: the cost for the purchase of the home or property value, both excluding land value.

Reductions

Once the revenue received from the rental costs were discounted by which we can deduce the following apply reductions:

• 100%: if tenants are between 18-30 years and net yields are higher than the minimum wage.

The reduction of 100% will be applicable from the tenant turns 18 until the day you reach 30 years of age. Where this age requirement is met only for part of the year, the reduction is only applied to the period corresponding to the above requirement (net return is met Regulations / Doctrine. 2nd Law 35/2006 Article 23.2 of 28 November 2006 Consultation Binding DGT V 2061-2007 ).

• 100% : if tenants are between 18-35 years and net yields are higher than the minimum wage and the rental agreement is prior to January 1, 2011.

The reduction of 100% will be applicable from the tenant turns 18 until the day he reaches 35 years of age. Where this age requirement is met only for part of the year, the reduction is only applied to the period corresponding to the above requirement (net return is met Regulations / Doctrine. 2nd Law 35/2006 Article 23.2 of 28 November 2006 Consultation Binding DGT V 2061-2007 ).

• 60%: in the other cases.

To be able to apply this reduction in FY 2013, the lessee must submit to the landlord before March 31, 2014, a communication with the following contents:

• Name, legal address and tax identification number (TIN) of the lessee.
• Property reference, or alternatively, full address of the leased property.
• Manifesting be aged between 18 and 30 during 2013, or during any part thereof, indicating in this case the number of days that meet this requirement.
• Protest been obtained during 2013 net income from employment and economic activities superior to Public Indicator of Multiple Effect Income (IPREM). 
• Date and signature of the lessee.
• Identification of the person or entity receiving such communication.

The landlord, meanwhile, will be obliged to keep this communication duly signed.

Communication Model lessee to the lessor for the purposes of applying the reduction for rental housing

The reduction will be 40% in the following cases:

• Yields a period exceeding two years generation.
• Yields irregularly in time (provided that are attributed to a single tax period) which are due to the renter received compensation for loss or damage to the property.