Government halts the increase in rents by setting the value of 1.02, despite this, it is possible for landlords not to be harmed through the extraordinary support to landlords to reduce the tax burden..

On October 21, Law No 19/2022, was published, which includes as the update coefficient for 2023 of the rents of the various types of existing leases, the value of 1,02 (2%). This value may always be different, as long as it is agreed between the parties involved.

In this sense, the Government created a compensation with tax benefits for landlords, reducing the rates of IRS or IRC (depending on whether they are individuals or companies).

Applicable rate (IRS)

 

If we add to this discount, the final amount of income received by the landlord will be very close to what it would have received if it had increased the income by 5.43% as the law would dictate.

How to calculate the income update

To know what amount of income you can pay, based on the annual update coefficient of rents, take the update of the year 2023 and multiply the amount of current income by 1.02.

(Example: 350×1,02=357€)

If it is necessary to round the value, it should be done to the penny unit, for example, an income of € 350.766 should be rounded to € 350.77.

Communication of the increase in income

The communication of the increase in rent must be made in writing by the landlord at least 30 days before the date of payment of the new rent, through a draft of the same.

The communication by letter must be registered, with acknowledgement of receipt, or delivered by hand, with with protocol of receipt in the copy and duly signed. The update of the income can only occur when the contract has been in force for more than a year, that is, one year after the beginning of the contract.

What are property income?

In the IRS, rents are considered category F, also known as property income.

You can only be taxed by category F if you have communicated the lease to the Tax and Customs Authority (AT) and issued electronic income receipts. Both procedures are carried out in the Finance Portal, except for exceptions provided for by law.

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