The imputation of income: when do you have to apply it?
Have you heard about the imputation of income in Spain?
I’m sure
In this article we explain what it is and how it is calculated.
Real estate that does not constitute the usual residence and that are not leased or affected by economic activities can generate a presumed income in the Personal Income Tax (IRPF).
It is necessary to remember the time at which this imputation occurs, as well as the procedure for its calculation.
How is the income imputation calculated?
Imputation of income in the personal income tax
When a person owns an “idle” property (that is, throughout the year he does not rent it or use it as a habitual home or for economic activities), “presumed income” must be charged to the general base of his personal income tax.
- In general terms, the tax of the imputation of income corresponds to 2% of the cadastral value of the property in question.
- In the context of the revision or modification of the cadastral value, a percentage of 1.1% of said value is established when it is carried out in the same tax period or in the previous ten.
Here is the link to see if the cadastral value of your home has been reviewed
- In the event that the property does not have a registered cadastral value or has not been duly notified to the owner, the imputation applied will be 1.1% on 50% of the acquisition value (or the value verified for the purposes of other taxes, in case it is higher).
The tax for on a house, it is also calculated like this.
Complete guide of property taxes in Spain for non residents
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Personal income tax for 2023 and 2024
Personal income tax for 2023 and 2024
As happened in 2023, the Treasury has confirmed that in the IRPF of 2024 in the imputation of income the coefficient of 1.1% is also applicable for properties whose cadastral values came into force from 2012.
Thus, in practice, in the 2024 personal income tax this coefficient of 1.1% is applicable for the cadastral values revised in the previous twelve years (2% if they came into force in 2011 or earlier).
When is there an imputation of income?
Requirements that determine the imputation of income
However, for the imputation of rents to proceed, the property must meet the following requirements at the same time:
- Built Urban Housing.
It must be a built urban property. That is, the house cannot be Rustic.
Rustic and solar properties are not affected (unless they house constructions that are not essential for agricultural, livestock or forestry).
- Not affected by economic activities.
It must not be affected by economic activities or be a generator of income from real estate capital (either by rent or by sublease).
- It must not be your usual home
Within the scope of the concept of habitual housing, the annexes to the house and up to two parking spaces are incorporated, provided that they are located in the same building as the usual home and have been acquired jointly with it. That is, in the same writing.
- Other homes
Ultimately, it is established that the property cannot be under construction or be considered unfit for use due to urban restrictions.
Imputation of income from second homes
The imputation of income from the second residence is calculated the same
The second homes used for own use generate imputation of income, since it is not the usual home.
Attention!
On the other hand, a house adjacent to the usual one, which joins the latter, also acquires the character of habitual housing, so it is not appropriate to impute rents for it.
Housing not susceptible to use
Doubts regarding the imputation of income
The requirement that the property is not susceptible to use “for urban planning reasons” usually generates doubts.
This situation occurs mainly in properties that are in a situation of ruin (a circumstance that the taxpayer can prove by any means of proof), or in properties that do not have a first occupation license.
Well, keep in mind that:
- The Treasury considers that the fact that a property has been built in violation of urban planning regulations or on non-buildable land does not imply that it is not susceptible to use.
But be careful, this interpretation is based only on the concept of “use” and does not take into account urban aspects.
If the property does not comply with the rule from the beginning, it can be defended that it is not susceptible to use for urban planning reasons and that the imputation of rents is not appropriate.
In the end, the treasury wants money and all housing, even if it is illegal, will almost always be taxed.
In summary
The imputation of income is a small tax that Hacienda has put in case it does not declare the rent that it can obtain for this second home. It’s like a covert wealth tax. As my uncle said, you have to live with it.
And as happened in 2023, in the personal income tax of 2024 the imputation of income for properties whose cadastral values came into force from 2012 is 1.1%, and not 2%.
