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Practical manual for Income Tax 2023.

Example: Real estate income allocation

Mr. JVC, during the year 2023, has been the owner of the following real estate properties:

  • Primary residence, whose unaudited cadastral value amounts to 34,800 euros.

  • Parking space acquired together with the property and whose unaudited cadastral value amounts to 3,900 euros.

  • Apartment on the beach that is only used during the month of vacation. The cadastral value of the same, which was revised with effect from 2014, amounts to 40,800 euros.

  • Apartment purchased for 105,000 euros on 1 July 2023 and rented out for a monthly rent of 600 euros on 1 September of that year. As of December 31, 2023, the property's cadastral value has not been notified to you. The value declared by the taxpayer for the purposes of the Tax on Property Transfers and Documented Legal Acts is the acquisition value, without the tax authorities having proceeded to modify it.

Determine the allocation of real estate income corresponding to said properties:

Solution

  • Primary residence and parking space: no imputation of real estate income is applicable.

  • Apartment at the beach. Imputed real estate income:

    1.1 per 100 s/40,800 = 448.80 (1)

  • Apartment purchased in 2023. Imputed real estate income:

    1.1 per 100 s/ (50% x 105,000) x 62 ÷ 365 = 98.10 (2)

Total imputed real estate income (448.80 + 98.10) = 546.90

Notes to the example:

(1) Since the cadastral value was revised in 2014, that is, after January 1, 2012, the percentage to be applied is 1.1% in accordance with the provisions for the 2023 tax period by the Fifty-fifth Additional Provision of the Personal Income Tax Law added, with effect from January 1, 2023, by article 66 of Law 31/2022, of December 23, on the General State Budget for the year 2023. (Back)

(2) Since the owner has not been notified of the cadastral value of the property as of December 31, 2023, the percentage of 1.1% is applied to 50% of the acquisition value of the property, a value that has not been modified by the Administration for the purposes of the Tax on Property Transfers and Documented Legal Acts. Furthermore, the imputed income must be determined in proportion to the number of days that the property has been available to its owner (from July 1 to August 31). Finally, the income derived from leasing the property is considered to be income from real estate capital, in which section it must be declared. (Back)