The income tax return campaign raises many questions for employees every year. Taxpayers explore every option allowed by the law to meet their goals whether that means reducing certain amounts or securing other tax benefits.
One of the most common questions concerns a concept tied to renting a home. This idea has been discussed in tax regulations for years but its application has become more limited to specific cases in recent times.
What happens if I submit the income statement after the deadline?
Since the start of 2015 the deduction for the habitual residence lease has been narrowed. Only taxpayers who meet one of the following conditions can continue to benefit from this deduction:
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Signed a lease with a start date before 2015 and paid rent for the habitual residence before that date.
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Had the right to interrupt the lease deduction for the habitual residence for amounts paid during a tax period that accrued before 1 January 2015.
What to do if the Treasury has not yet returned the money from the income tax return
Beneficiaries can claim deductions amounting to 10.05 percent of amounts paid in the tax period for the lease of the habitual residence, provided that the tax base is below a yearly threshold and subject to any regional rules applicable in each autonomous community. In some cases the deduction for the habitual dwelling lease may continue to exist under the special arrangement of a given region.
How can I fix an error in a tax return?
Some autonomous communities still allow a self correction path for rent deductions in certain scenarios. Regions that currently keep this door open include Andalusia, Aragon, Asturias, Balearic Islands, Canary Islands, Cantabria, Castilla La Mancha, Castilla y León, Catalonia, Extremadura, Galicia, Madrid and the Valencian Community. Other regions such as Euskadi, Navarre, La Rioja and Murcia do not provide this option at present. Depending on the regional rules, the amount involved can vary significantly, for example some regions reference a fixed monetary cap.
Last minute tips for filing your income tax return
Thoughts for owners
Regarding owners who have usufruct rights, the value received from rent is typically considered part of the income statement as real estate return on capital. This may influence how the income from real estate is reported on the tax return, so careful documentation is essential.
You can now request an appointment to make an income statement over the phone.
In many cases leasing activity can be treated as a commercial activity, with income from leasing falling under general business income. This is especially true when the activity employs at least one full-time worker and meets other criteria established by tax authorities.
Source: Tax Authority guidelines and regional tax offices.