Subletting is a method that allows tenants to
rent out their property or part of a property to third parties. Although it is a legal procedure, there are some rules you must respect if you are thinking of doing this, which
SUPERCASA Notícias will explain to you throughout the article.
Please note that in order to sublet a property you must have the property owner's authorisation, and once authorised, you must draw up and sign a contract and declare this income in the IRS.
What do you need to know to sublet?
According to the law, subletting is only possible if there is written authorisation, i.e. you must inform the owner in writing of your intention to sublet the property and ask for their authorisation.
It may also be the case that the landlord is aware of the subletting situation and does not comment on it, but it is always preferable to have his written authorisation. If the landlord does not give his consent, the subletting contract is not valid.
What happens to the subletting contract if the lease ends?
If the tenancy agreement ends, so will the subletting agreement, because in the subletting agreement the same rules established in the initial agreement apply.
It is important to keep all the documents relating to this process so that you can safeguard your rights vis-à-vis the subtenant, particularly with regard to the payment of rent.
Rent amount
There is a legal limit to the amount of rent that can be charged, whether you are subletting the whole house or just part of it. According to article 1062 of the Civil Code, "the tenant may not charge the subtenant rent or rent in excess of or proportionally in excess of what is due under the lease, increased by 20 per cent, unless otherwise agreed with the landlord".
This implies a ceiling of 20 per cent on the amount of rent you pay. This amount can only be exceeded if the landlord authorises it.
Example:
- For a rent of €500 you can only charge the sub-tenant a maximum of €600 (500 + 20% = 600);
- For a rent of 1000€, the maximum amount charged will be 1200€ (1000 + 20% = 1200).
How does it work in tax terms?
If you sublet a property, you have to declare the resulting income in the IRS, i.e. the amount that corresponds to the difference between the rent you received from the subtenant and the rent you pay to the landlord.
In order to fill in the IRS declaration correctly, you should fill in box 5 in Annex F relating to property income. In this box you must enter
- Amount of rent received;
- Amount of rent paid to the landlord;
- TIN of the sub-tenant;
- TIN of the landlord.
According to the Tax Authority, it is also compulsory to issue an electronic rent receipt for "the difference earned by the sub-tenant between the rent received from the sub-tenant and that paid to the landlord".
Landlord's rights
If the sub-lease is applied to the entire property, the landlord can replace the tenant, i.e. the sub-tenant becomes a direct tenant. However, this right can only be exercised by the landlord by means of a court notice to the tenant and sub-tenant.
When this notice is given, the sub-letting agreement ceases to have effect and the sub-tenant becomes a direct tenant, who must be informed that the rent must be paid directly to the landlord.
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