If you are considering buyinga new house in Calpe, you will probably want to know what the taxation is like when doing your annual tax returns. Hereis everything you need to know for your finances to be up-to-date and to seewhich is the most cost-efficient option.

a second residence in your taxreturns: how is it taxed?

The truth is the taxation onyour second residence depends on how it is used but it must be included in your tax returns.

Taxation will be different ifyou declare it as a holiday rental home, as a first residence, if you sell itor if you are going to be using it. Let’s see how the IRPF (Personal Income Tax) needs to bedeclared depending on the use you are making of your home:

· Permanentrental: buying with the purpose of renting is very common.In this case, the rent tax is considered as real-estate assets return and it istaxed following the general tax base. You can take away expenses such asinterests, repairs, the Property Ownership tax, community fees, insurances… andif your tenant uses the property as their main, permanent home, you will beable to reduce 60% of the net return.

· Touristrentals: if you rent your house seasonally, you mustdeclare the profit made as income received from returns oncapital or property investment, balancing out the revenues from theleanings and the expenses. In this case, you cannot apply the 60% reduction.

· If you aremaking use of the property: if you buy a second residence for your own use,you will have to do an imputation of income in your IRPF. You will need to paythe 2% of the cadastral value of the property or a 1.1% if it has been revisedduring the last 10 years.

· Sale: if youdecide to sell your second residence, it is necessary to assess whether thereis a property gain or loss. Two things will be taken into account: on one hand,the value of the transmission of property and the expenses derived from it. Onthe other hand, the value of the purchase and its expenses.The profit is taxed at tax rates between 19 and 23%.

From the point of view of investment or use, asecond residence is always a good idea. If you feel like having a secondresidence or if you are looking to invest, don’t hesitate. In towns on theCosta Blanca such as Calpe, it’s a safe bet.

Would you like to have a secondresidence in Calpe? We can help you find the perfect home.