Amortization

Amortization of the property

In most cases the program calculates the amount of the deductible expense as amortization based on the data entered in the following sections:

You must necessarily indicate whether the acquisition of the property is for a fee or for profit (property acquired by inheritance, donation).

If one part was acquired for a fee and the other for profit, both boxes must be checked.
Acquisition date. If there is more than one date, the date corresponding to the first acquisition will be indicated.
It will indicate the date of transmission if it occurred during the year.
The number of days the lease is valid for.

If you had to register more than one lease for that property, you will have to indicate the number of days for each type of lease. The rest of the data (date of acquisition, cadastral value, etc.) will be transferred by the program.
The cadastral value that appears on the IBI receipt in proportion to your percentage of ownership.
The cadastral value of the construction in proportion to its percentage of ownership.
The percentage that the value of the construction represents with respect to the cadastral value is calculated by the program.
Acquisition amount.

In acquisitions for valuable consideration, it is the amount of the acquisition. In the case of acquisitions for profit, the value assigned for the purposes of inheritance and gift tax will be taken as the acquisition amount, but may not exceed the market value (generally, this will be the value stated in the deed).
The amount of expenses and taxes corresponding to the acquisition of the property paid by the purchaser.
You must indicate the amount of improvements made in previous years.
In the case of improvements made in 2021, you will have to record the amount and the days of amortization.

Please note that, in general, the improvement affects the construction, so the part corresponding to the land will not be excluded from it.

The data relating to the NIF of the person who carried out the work or service and the date of completion of the improvement are voluntary.

Amortization in special cases

In those cases where it is not possible to compare the acquisition cost and the cadastral value with the data entered in the different boxes, it will be the taxpayer who has to calculate the depreciation.

In these cases, the taxpayer must indicate exclusively the type of acquisition: onerous, lucrative or both without completing any information in the "Depreciation of the property" section and will record in the "Depreciation in special cases" section the amount of the depreciation that has been previously calculated.

Special amortizations include, among others:

When the taxpayer is the owner of the usufruct (whether or not he additionally owns another part in full ownership).
When the land and the construction have been acquired separately.
When only part of the property is rented (renting a room...)
When being the owner of a part of the property the percentage of ownership varies during the year (due to having acquired or transferred a part).
When the property does not have an assigned cadastral value (recently built properties or properties abroad).
In the last year of amortization when the application of the general rule results in an amount that causes the total accumulated amortization to exceed the maximum amortizable value.

In the exceptional case where the taxpayer chooses to apply a depreciation percentage of less than 3%, the amount resulting from applying that percentage to the greater of: The cadastral value or the acquisition cost paid, not including in both cases the value of the land, will also be recorded in this amortization section in special cases.

However, remember that in a subsequent sale of the property, the acquisition value will be reduced by the amounts that would have resulted from applying the 3% even if you had deducted, as amortization, a smaller expense for having applied a percentage lower than 3%.

Examples of special amortizations

A taxpayer acquired the usufruct of a home through inheritance. The value for the purposes of Inheritance and Gift Tax is €55,000 and the amount of said tax paid on this acquisition is €5,000. The property was rented all year and the rent is €800 per month.

It will mark a lucrative acquisition
- If the usufruct were temporary and had a duration of 10 years
  
  “Amortization in special cases” = Acquisition cost / duration of usufruct = 60,000/10 = 6,000
- If the usufruct were for life
  
  “Amortization in special cases” = 3% * 60,000 = 1,800
Whether the usufruct is temporary or for life, the amount of the amortization may not exceed the amount of the gross income from the right, in this case: 800*12= 9,600
A taxpayer purchased 50% of a property for €150,000 and acquired usufruct of 50% by donation with a value for the purposes of Inheritance and Gift Tax of €100,000. The amount of said tax paid on this acquisition is €5,000 and the expenses inherent to the acquisition are €1,000. The cadastral value of the property is €90,000, with the value of the construction being €72,000. The property was rented all year round and the rent was €1,000 per month.

It will mark an expensive and lucrative acquisition. As the holder of two different rights, he will amortize:
- The right of usufruct: 3% * (100.00+5,000+1,000)=3,180
- Full ownership: the acquisition cost of the construction (150,000*80%) is greater than the cadastral value of the construction (72,000*50%). The amortization would be: 3% (150,000*80%)= 3,600
The amount of “Amortization in special cases” will be = 3,180 + 3,600 = 6,780
A taxpayer purchased a plot of land on 01/01/2016 for €30,000 with expenses of €1,000. On 01/12/2018, the construction of the house was completed and on 01/01/2021 it was intended for rent. The cost of construction is €150,000, and the expenses and taxes amount to €10,000. The cadastral value of the construction is €100,000.

It will mark an onerous acquisition

To calculate amortization, the highest of: Cadastral value of the construction (100,000) or the cost of construction (150,000+10,000)

"Amortization in special cases" = 3% (160,000) = 4,800
A taxpayer owns 100% of a home acquired for valuable consideration for €200,000. On 12/1/2021, he rents a room that makes up 30% of the surface area of the house. The cadastral value of the property is €100,000, while the cadastral value of the construction is €80,000.

It will mark an onerous acquisition

Cost of acquisition of the construction (200,000 * 80%) = 160,000 which is greater than the cadastral value of the construction.

The room represents 30% of the property, so the cost of acquiring the room would be: (160,000*30%)= 48,000

The depreciation corresponding to the room: (3%*48,000)= 1,140.

The amount of "Amortization in special cases" would be 1/12 * 1,440 = 120 (since the room is rented for only one month)
A taxpayer purchased 60% of a home on 1/1/2016 for €80,000. On 10/01/2021 he bought the other 40% for €40,000. The cadastral value is €100,000 and the construction value is €80,000.

It will mark an onerous acquisition. To calculate the amortization, the highest of:
- The cadastral value of the construction 80,000
- The acquisition cost of the construction (80,000 + 40,000)*80% = 96,000
The amortizable value will be: 96,000

The amount of “Amortization in special cases” will be = 3% * [(80,000 * 80%) + (40,000 * 80%) * 3/12] = 2,400
A taxpayer purchases a property for 200,000 euros to rent it out. The house, being recently built, has no cadastral value. The value of the land is estimated at 10%.

It will mark an onerous acquisition

The value of construction: (200,000*90%)= 180,000

The amount of “Amortization in special cases” will be = (3% * 180,000) = 5,400

Example of amortization of a property acquired for a fee and profit (except for the case provided for in amortization in special cases)

A taxpayer inherits 50% of a property on 01/01/2015, with the other 50% going to his brother. The value for the purposes of Inheritance and Gift Tax is €60,000, the expenses and taxes paid on the acquisition are €3,000.

On 01/08/2018 he bought his brother's 50% for €80,000, paying €2,000 in expenses and taxes. The cadastral value of the property is €100,000, with the value of the construction being €80,000. The property was rented all year round.
- It will mark an expensive and lucrative acquisition
- Date of acquisition 01/01/2015
- Number of days of contract duration 365
- Cadastral value (part corresponding to the percentage of ownership in the property) 100,000
- Cadastral value of the construction (part corresponding to the percentage of ownership in the property) 80,000
- Purchase amount 140,000 (60,000+80,000)
- Expenses and taxes inherent to the acquisition 5,000 (3,000+2,000)
The amortization amount calculated by "Renta Web" will be = 3% * (116,000) = 3,480
A taxpayer inherits 50% of a property on 01/01/2015, with the other 50% going to his brother. The value for the purposes of Inheritance and Gift Tax is €50,000, the expenses and taxes paid on the acquisition are €3,000. On 01/08/2018 he bought his brother's 50% for €80,000, paying €2,000 in expenses and taxes. The cadastral value of the property is €150,000, with the value of the construction being €120,000. The property was rented all year round.
- It will mark an expensive and lucrative acquisition
- Date of acquisition 01/01/2015
- Number of days of contract duration 365
- Cadastral value (part corresponding to the percentage of ownership in the property) 150,000
- Cadastral value of the construction (part corresponding to the percentage of ownership in the property) 120,000
- Purchase amount 130,000 (50,000+80,000)
- Expenses and taxes inherent to the acquisition 5,000 (3,000+2,000)
The amortization amount calculated by "Renta Web" will be = 3% * 120,000 = 3,600

Example of depreciation of a property on which an improvement has been made

In January I bought a flat for €120,000, and the expenses and taxes paid were €10,000. Before renting it out, he carried out a renovation worth €30,000. The renovation will be completed in September and I will rent the property in December. The cadastral value of the land is €100,000 and that of the construction is €80,000.

Purchase date: 01/01/2021
Number of days of duration of the lease: 31
Cadastral value: 100,000
Cadastral value of the construction: 80,000
% of the cadastral value of the building (calculated by the program): 80%
Purchase amount: 120,000
Expenses and taxes inherent to the acquisition: 10,000
Improvements made in 2021:

NIF of the person who carried out the work (voluntary completion) Date (voluntary completion) Amount: 30,000 (floor portion not excluded). Amortization days: 31