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Do you want to know what real estate income allocation is? Keep reading because we are going to talk about this topic next.
What is an imputed real estate income
Among the numerous doubts that citizens usually have, there is the question of whether taxes must be paid for having an empty apartment. The answer to that question is yes, since owning a home that is not rented represents a burden for the IRPF. This is what is known as imputed property income, and that is what we are going to talk about in this post.
Thus, Article 85 of Law 35/2006 on Personal Income Tax establishes what an imputed property income is and also defines what types of properties will be affected. If we analyze this law, we can establish that it is an income that, for tax declaration purposes, we will have to declare, since it is an empty home that is not the habitual residence. The tax authorities, after all, consider that any home that is not the habitual residence can generate some type of income, and since there is that possibility of obtaining benefits, a minimum must be paid when filing the tax return.
How to calculate the imputation of property income in 2023
Normally, the amount of imputation in a real estate income will be 2% of its cadastral value, value that must appear in the Property Tax. However, there are two exceptions to consider:
- In properties whose cadastral value has been reviewed or modified after January 1, 1994, the amount it will be 1.1% about the cadastral value.
- The amount will be 1.1% on its value in the Wealth Tax when the property does not have a cadastral value or the tax authorities have not previously communicated it.
How it applies in some doubtful cases
Although the law is clear on this matter, sometimes situations arise that may raise doubts about whether the imputation of property income should be made. Below, we will see some of these situations.
When the property is inherited, but the acceptance of the inheritance has not yet been formalized
Generally, those who are named heirs must pay the Inheritance and Donations Tax. If that inheritance includes any property, they may also have to pay some municipal capital gains tax. However, in cases of pending inheritance (that is, when the act of acceptance and partition of the inheritance has not been carried out), property income must be imputed for those properties that are part of the inheritance. Those called to the inheritance, therefore, are the ones who must pay the property income based on the proportion of the inheritance that corresponds to them.
When the purpose of the property is the economic activity of one of the spouses
It may happen that the property is related to the economic activity of only one of the spouses. In these cases, doubts usually arise about whether the other spouse, who does not engage in any related activity, must impute property income.
The tax regulations for 2023 indicate that no. The imputation of the income not applicable when the spouse is not related to the economic activity carried out in the property, something that has been ratified by the TEAR of Castilla la Mancha.
When only the bare ownership or the usufruct of the property is held
The tax regulations for 2023 establish that, in cases where the taxpayer only owns the bare property of the property, this is not obliged to impute income.
However, the matter differs when it comes to the usufructuary. When there are real rights of enjoyment in a property, the income will correspond to the holder of the real right of usufruct, who must pay an imputed property income of 16.66% of usufruct.
When the property has rented rooms
If part of the property is rented (generally some room), the imputation of property income will only take into account the part of the property that is not affected by that activity. That is, only income will be imputed for those areas of the property that are not rented.
When the property is abroad
When we are talking about a property located in a foreign country, the tax regulations establish that must indeed practice the imputation of property income. In these cases, the property will not have been assigned a cadastral value, so the income will be 1.1% of its value for Wealth Tax purposes.
When the property is in the process of being vacated
Another case that often raises numerous doubts is when the property in question is occupied, which prevents its use by its owner. From to exist a judicial procedure to recover its possession, the taxpayer will not have to impute any type of imputed property income.
