I’m going to rent my apartment. I have a mortgage on it that I benefit from because I am deducted from personal income tax as it is my usual home and I live in it. How will it affect personal income tax?
I’m going to rent my apartment. I have a mortgage on it that I benefit from because I am deducted from personal income tax as it is my usual home and I live in it. How will it affect income tax for next year? What do I have to declare and what can I deduct from that rent? In the event of not continuing to rent, will I be able to recover my mortgage relief?
As a landlord , you can rent your home for different purposes: seasonal, vacation rental, for the development of a business or professional activity, or to satisfy the tenant’s permanent housing need .
Let’s take this assumption as an example, since it is the most common. When you make your income statement , you must declare all the income you receive from the lease of the property, whether in cash or in kind; In other words, you must declare the income , the amount of the assets transferred with the property (for example, when the furnished home is rented) and the impact of the payments made to the tenant: supplies, taxes …
Likewise, article 23.1 of the Personal Income Tax Law includes which expenses are deductible , among which are: interest and financing expenses of the capital invested in the acquisition and improvement of the home (mortgage interest); interest and financing expenses of the goods assigned with the house (if you financed the furniture or appliances, you can include the part destined to the payment of interest); costs of conservation and repair of the property(painting, arrangement of facilities, etc.); non-state taxes and surcharges, as well as state taxes and surcharges; amounts accrued by third parties as a result of personal services: administration expenses, security, porter, community of owners fees and other services related to housing; expenses for formalizing the rental or for the legal defense of the home or its performance; insurance contract premiums; expenses for services and supplies, as long as you pay them and do not pass them on to the tenant, and so on.
Likewise, when the difference between income and expenses shows a positive result, article 23.2 of the Personal Income Tax Law will allow you, as landlord, to apply a reduction of 60% as long as the rent of the dwelling in question is used for housing. .
With respect to the mortgage deduction , you cannot deduct the payment of it if it is not your habitual residence, as this deduction only applies to it.
For these purposes, and to know when the property will become your habitual residence, article 41.bis of the Personal Income Tax Regulation offers the definition of this concept, considering this as “the building that constitutes your residence for a continuous period of at least three years. However, it will be understood that the dwelling had the character of habitual when, despite not having elapsed said period, the death of the taxpayer occurs or other circumstances that necessarily require the change of address, such as marriage celebration, matrimonial separation. , job transfer, obtaining the first job or change of job, or other justified analogous ”.