10% of the rent of the home can be deducted from the taxable base of Income

Tenants will be able to deduct from the taxable base of the Income Tax up to 10% of the total annual amount they paid for rent for the property in which they live (“house-dwelling”) during 2023 and subsequent fiscal years, according to AFIP Resolution 5521/2024 published this Tuesday in the Official Gazette that regulates –with a nine-month delay– Law 27,737 approved last year.

Article 11 of that law of October 10, 2023, approved during the previous Government, incorporated as a deduction from Income Tax “ten percent (10%) of the total annual amount of rentals of properties intended for housing. Both parties, tenant and landlord, may make use of this deduction in addition to other existing ones,” clarified tax specialist Marcelo Rodríguez.

The objective is that tenants and landlords register the contracts with the AFIP.

“As an example, an employee who pays rent of $350,000 per month, You will be able to deduct a total of $420,000 annually (10% of $350,000 x 12) in rent. Taking an average tax rate of 15%, 23% and 35% can save the sum of $63,000, $96,600 and $147,000 for the year, according to Rodriguez.

It happens that if the rent is higher, since there is no limit, benefits those with higher rentsFor example, if you pay $1,200,000 in monthly rent, the maximum relief is $504,000 (1,200,000 x 12 x 10%) at a rate of 35%.

“Employees who must report the deduction for 2023 rents They have until July 15, 2024 so that their employers can consider it in the annual settlement of 2023. After that period, they will no longer be able to do so,” clarified tax specialist Sebastián Domínguez.

For their part, specialists Fernando López Chiesa and Florencia Iaciancio highlighted that “the Income Tax Law allows a 40% deduction of the sums paid by tenants for the rental of properties that are intended for the permanent residence of the taxpayer with the limit of the non-taxable minimum. It is also important to verify the requirement that the tenant does not own any property, whatever the percentage“With law 27,737, 10% was added.

They added: “The tenant does not have to have any real estate registered in his/her name in the Real Estate Registry, even in those cases where he/she has a vacant lot, an undivided shared percentage of a property or has received a property (or a percentage) by inheritance or donation.”

This general deduction applies not only to the employee in a dependent relationship but also to the retired and even the self-employed. And the rental contract must be registered with the AFIP.

According to Sebastián Domínguez, he highlighted the most important aspects:

• Information on Form F572 Web: Employees must report the 10% deduction of the monthly amount of rentals for residential properties using Form F572Web.

• Lessors under the Monotributo regime: the deduction can be computed by the lessor in the income tax, even if he has chosen to declare the rental income under the Monotributo Regime.

• Supporting documentation: The amount of rent paid must be supported by a bill the document equivalent issued by the lessor, as stipulated in the lease agreement.

• Presentation of the rental contract: in the first tax period in which the deduction is applied and with each renewal of the contract, the employee must Send a copy of the rental contract in .pdf format to the AFIP through the service “Income Tax Deduction Registration and Update System (SiRADIG) – WORKER”.

• It is essential that employees report the amount of their 2023 rents using Form F. 572 Web by July 15, 2024. Failure to do so will result in losing the opportunity for their employers to consider this deduction when making their 2023 annual settlement. The amount corresponding to the deduction for rents must be included by employers in the item “Other Deductions” from Form F. 1357.