Real estate crowdlending is a modern and secure way to invest in housing construction or rehabilitation projects, lending money to developers in exchange for interest. This service connects investors with selected projects with all the necessary information to invest with confidence.
When investing in this modality, it is convenient to understand how the profits obtained are taxed and how to declare them correctly in order to avoid problems with the Treasury.
What is real estate crowdlending?
Crowdlending brings together a multitude of people who lend money to companies or real estate developers to finance their projects. Instead of buying a share of the property, as in real estate crowdfunding, here the investor lends money and receives periodic interest as a reward.
This form of investment reduces risk and offers predictable income, since interest is paid as the project progresses. However, these returns are subject to taxation and must be declared.
Taxation of real estate crowdlending
The interest you receive for lending money through platforms such as wecity is considered income from movable capital. This means that they are taxed in your personal income tax return within the savings base.
When you invest in Spanish platforms, it is usual for them to directly withhold the tax and pay it to the Treasury, which facilitates the management for the investor.
On the other hand, if you use foreign platforms, they will probably not withhold taxes, so you will have to declare that income on your own and apply double taxation deductions if applicable.
Personal income tax brackets applicable to your interests
Income from movable capital is taxed according to a progressive scale which, for the current year, is as follows:
- 19% for interest up to 6,000 euros.
- 21% for the portion between 6,000 and 50,000 euros.
- 23% for the portion between 50,000 and 200,000 euros.
- 27% for the portion between 200,000 and 300,000 euros.
- 30% for amounts over 300,000 euros.
These brackets apply to the total sum of your income from movable capital, not only from crowdlending, but also interest from bank accounts, dividends, etcetera.
Moreover, they work progressively. In case of receiving 10,000 euros, not everything would be taxed at 21%, only the last 4,000 euros (the difference between the first and second tax brackets).
How to declare your real estate crowdlending income
In the income tax return, interest should be included in the following boxes:
- Box 027: for interest obtained as income from movable capital.
- Box 389: for capital gains, where you will include bonuses or cashback received, as well as losses from bad loans or commissions charged by the platform.
If you have had losses due to defaults or commissions, you will be able to compensate them with your earnings, reducing the final tax. Since 2019, this compensation can cover up to 25% of the income from movable capital.
Foreign platforms and additional obligations
When you invest in foreign real estate crowdlending platforms and you are a tax resident in Spain, you have to declare those interests in your personal income tax.
In addition, if the total invested or balance on these platforms exceeds 50,000 euros, you must file form 720, an informative declaration on assets abroad.
Practical example of crowdlending taxation
Let’s suppose that you have obtained in a year 5,500 euros in interest from different crowdlending investments. To calculate how much you will have to pay in your income tax return, we apply the progressive income tax brackets for income from movable capital.
The first 5,000 euros are taxed at 19%, which means a payment of 950 euros in taxes. The remaining 500 euros are taxed at 21%, adding another 105 euros. In total, you will have to pay 1,055 euros.
Remember that you must declare the total sum of all your capital gains, regardless of whether they come from one or several platforms, and reflect them in your income tax return.
In short, investing in real estate crowdlending is an accessible and profitable way to diversify your savings. And knowing how your income is taxed and how to declare it will help you comply with the Treasury without complications and make the most of this investment method.
If you are looking for reliable and well-managed opportunities, our platform for developer financing platform offers carefully selected projects and all the information you need to invest with peace of mind.
Remember that, although the management may seem complex at first, most platforms, such as wecity, collaborate with Hacienda to facilitate the process. Thus, with the right information and the right advice, your experience investing in real estate crowdlending will be much safer and more profitable.
