The acquisition of a second home is shown as one of the main investment formulas for Spaniards, with the aim of getting the maximum possible return on savings. There are also many people who want a second home for their personal enjoyment, close to the coast or away from the noise and stress of the cities during the holidays.
Aware of this situation and given that we are immersed in the middle of the Income Tax campaign,from AYCE Laborytax we have believed that it would be interesting to make a post in which we explain how the second home is taxed in the Income Tax return.
Taxation of a second home in the income tax return
Those people who have a second home in property, can suffer significant headaches when making the income tax return, so below we will give you the guidelines you must follow.
You are interested in:
The first thing you should take into account is that the mere possession of a second home, generates the obligation to make an imputation of income in the Income Tax Return. This imputation of real estate income is conditioned on the properties meeting the following requirements:
- That the property is not affected by economic activities.
- That the property is not leased.
- That it does not constitute your habitual residence.
- That it is not a property under construction, nor of immubels that, for urban reasons, are not susceptible to use.
Tax increase for taxpayers with a second home in ownership
The determination of a chargeable income is made by applying the following percentages:
- 2% on the cadastral value of the property that appears on the receipt of the Real Estate Tax.
- 1.1% to properties with a revised cadastral value, modified or determined through a valuation procedure, which has entered into force in the tax period or during the previous ten years.
- To those properties that do not have cadastral value, or this has not been notified to the taxpayer, 1.1% will be applied on the 50% of the highest of the following values: the one verified by the Administration for the purposes of other taxes or the price, consideration or value of the acquisition.
You are interested in:
Income exempt from taxation in the Personal Income Tax of 2018.
What to do if the house is rented during holiday periods?
If we have a second home that we rent, we will have to be taxed as a return on real estate capital. For this we will have to declare all the income obtained, discounting those expenses that we have had to face while the house has been rented.
By renting a second home we can deduct the interest of the loan that we have charged when buying the property,expenses for possible repairs, conservation of the house, Real Estate Tax, receipts from the community of neighbors, fees paid for the garbage collection service, home insurance, and the amortization of the property.
When renting a second home as “tourist housing”, you will have to inform the Tax Agency through form 179, of quarterly informative declaration of the transfer of use of housing for tourist purposes.
You are interested in:
How to rent a tourist apartment and tax the Treasury correctly, to avoid scares.
In case the property was rented asa habitual residence, we could reduce the yield by 60%.
What happens when you sell the second home?
After the sale of a second home, the amount obtained as a capital gain or loss will have to be taxed, after differentiating between the amount paid for the acquisition and the amount of the sale.
In turn, all expenses corresponding to the purchase and sale of the property will be deducted. If there had been a gain, it would be taxed between 19% and 23%.
conclusion
A second home owned, implies for tax purposes an imputation of the income in the Personal Income Tax, with the aim of reflecting in some way the economic capacity of each taxpayer. The income to be declared will be equivalent to 2% of the cadastral value of the property, or 1.1% if the cadastral value has been revised during the ten years prior to the declaration.
