The property is a great investment and generates high returns. Of course, if it is rented out, there is an obligation to declare the income received, from which d deductible expenses must be subtracted. But, what can be deducted in the rental of a property? We will see it below.
In the real estate tax field, d deductible expenses for rental properties are part of optimizing the landlord’s profitability. Understanding correctly which items are considered by the tax authorities allows for legally reducing the tax burden and improving the net return on the rented property investment.
This analysis applies to both rented properties with deductible expenses and furnished rental properties, where taxation may include additional elements such as depreciation of furniture or equipment.
What expenses can the owner renting a property deduct?
There are a number of expenses that you can deduct on your income tax return, as follows:
Renovations or repairs
To keep the rental property in good condition, it is necessary to carry out a series of repairs whenever necessary. Therefore, repair or replacement of installations, painting, and other elements are included as deductible expenses. In fact, it can be deducted on the income tax return for the 4 years following the date of the invoice.
This section also includes necessary improvements to maintain the habitability of the property, which in tax terms is known as d deductible expenses in rental properties for the owner. It is important to differentiate between improvement (not immediately deductible) and repair (deductible), as this distinction directly affects the taxation of personal income tax (IRPF).
Appliances and other items
This type of items can be deducted if they are part of a depreciation; that is, 10% of the total per year up to a maximum of 20 years. But it must be justified.
Community or maintenance fee
The community fee can also be deducted on the income tax return. In addition to other services provided to the community and paid separately, such as property management, security company, gardening, etc.
These concepts fall under the so-called other tax-deductible expenses in rental properties, especially relevant in communities with centralized services or developments with comprehensive maintenance, where the economic impact can be significant for the owner.
Energy certificate
The energy certificate is mandatory for owners who have a property for rent. It is a deductible expense that can be included in the income.
Local taxes
In terms of taxes, the following are deductible: the payment of IBI, waste collection fees, sewage fees, lighting fees and some national fees and surcharges.
Insurance
The home insurance can also be deducted if a property is rented. More specifically, insurance premiums such as liability insurance, theft, glass breakage, fire, etc. In fact, it serves as an incentive for the owner to acquire this type of insurance.
In practice, including insurance within the deductible expenses for rental housing not only reduces the taxable base but also protects the investment against common risks such as defaults, damages, or civil liability arising from the use of the property.
Utility expenses
Can utility expenses be deducted? In the case of owners who have the utilities registered in their name and the tenant pays them through direct debit, 100% of the total can be deducted.
Financing expenses
Another deductible expense related to rental is the interest on the mortgage payment, in the case of having taken out a mortgage to rent the property. Additionally, other financing expenses such as mortgage guarantee, notary fees, agency fees, etc. are also considered.
Real estate agency fees
If a real estate agency offers the service of searching for the property or tenant, these expenses can also be deducted in the Income Tax.
Other expenses
Other fiscally deductible expenses relate to the maintenance costs of parking or storage, as long as they are included in the contract.
The correct application of deductible expenses for rental housing for the owner can make significant differences in annual profitability, especially in tight markets where every tax optimization directly influences the net return on real estate investment.
Keep in mind that deductible expenses can change from year to year, so it is important to stay informed about the latest developments in Income Tax.
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