"NEWS of the June 28, 2016-Clarifications on the subject of residential leasing"

Posted by on Jun 28, 2016

The IRS, with circular No. 27/E/2016, has provided some guidance on taxation of real estate and, in particular, has clarified the requirements to be verified for the purpose of the facility is connected to the residential leasing.

You remember that the law of stability for the 2016 (Law 208/2015) in article 1, paragraph 82, introduced the letters i-e. 1) and i-e. 2), in article 15, first subparagraph, of the tax code, recognising the deduction to 19 per cent of the costs incurred in relation to residential leases and paid to service the exercise of the option for the final redemption of the property.

This deduction is granted to taxpayers who at the time of conclusion of the contract shall meet the following requirements:

  • have a total income of not more than 55,000 euros;
  • non-completion of 35 years of age.

In reference to the second requirement, the IRS has clarified that the population requirement, so as to profit, detects only at the time of conclusion of the contract.

Thus, the completion of 35 years of age the youngest member of the pair in the year 2017 (class of 1982), does not affect the use of the facility.

The same applies to the income requirement: no need for a total income of not more than 55,000 euros for the duration of the financial lease and, therefore, the benefit can be enjoyed even if, in the course of the term of the contract, the conductors may be holders of a higher income.

Circular No. 27/E/2016 has also clarified that the maximum amount on which to calculate the deduction is different according to age:

  • for young people who at the date of conclusion of the contract under the age of 35 years, the deduction is recognized for a maximum amount of fees and charges that annually may not exceed 8,000 euros and a maximum amount of ransom of 20,000 euros;
  • for those who make 35 years at the date of conclusion of the contract, which is older than 35 years, the same deductions shall be recognized due mid-sums and, therefore, 4,000 euros for the fees and charges and 10,000 euro for the redemption price.

Finally, with regard to charges, the Inland Revenue has specified that, similarly to what is provided in the event of a mortgage are not deductible charges incurred in any contract of insurance on real estate.

Equally, they are not recognized any intermediary costs, incurred by the lessor, financing for the identification and retrieval of the property required by part presenter, folded up on itself.

Otherwise, this includes the cost of the contract of leasing.

by Sandro Cerato