Patras is a university city and many owners rent flats to students, in the centre, in Psila Alonia, in Rio and around the campus. Student lettings have their own characteristics: contracts that run for the academic year, parents paying from another city and families who need correct paperwork for their benefits.
If you rent, or are thinking of renting, to students, these are the points to have in order.
Before you sign: the energy performance certificate
To let a property you normally need a valid Energy Performance Certificate, whose number is also entered in the lease declaration. Check whether yours is still valid before you advertise, so the signing is not delayed.
Declaring the lease to the tax authority
Every lease is declared electronically to the tax authority by the landlord and is then accepted by the tenant with their own codes. The declaration must be made within the deadline set by the authority from the start of the lease. This step is not a formality:
- without a declared lease the student’s family cannot claim the student housing allowance
- without a declared lease the tenant also loses the rent refund, where they are entitled to it
- in an audit, undeclared income can be taxed with penalties and surcharges
Whose name goes on the lease?
Either the student, or the parent who claims them as a dependant. Ask the family which name they need for their own benefits. Changing it months later requires an amended declaration and wastes time.
Students sharing a flat
If two or three students share the same flat, the way it is declared, with one tenant or several, affects the benefits and refunds of each of them. This is a case worth reviewing with an accountant before the return is filed.
Ending or changing a lease
When a student leaves early or the rent changes, the change or the termination is also declared electronically. Otherwise the tax authority will assume you are collecting rent that in practice you are not receiving.
How rental income is taxed
Rental income is declared every year in forms E2 and E1 and is taxed separately from salary or pension, on a scale that starts at 15% for the first band. The rates for the higher bands have changed in recent years, so the calculation should be made with the rules of the year you are filing for.
Also note:
- if the property is co-owned, each owner declares the rent in proportion to their share
- amounts for shared building costs and utilities that the student pays separately are not rent, but the lease must state clearly what the rent covers
- a deposit that is returned is not income, though if it is set off against the final month it is declared as rent
Payment by bank: why it suits you
Paying rent by deposit or transfer into your account does not only help the tenant prove payment for refunds and benefits. It protects you too: if a month goes unpaid, there is a clear record of what was collected and what was not. Write your IBAN into the lease and ask for the month and the address to be stated in the payment reference.
Unpaid rent
If a tenant stops paying, simply leaving the amounts out of your return is not enough. To avoid being taxed on rent you never received, legal proceedings for collection or eviction usually have to have started and the special codes in the tax return have to be completed. Speak to a lawyer and an accountant early, not after six months have piled up.
The five most common mistakes we see
- a verbal agreement “until the summer” with no declaration to the tax authority
- a declared rent lower than the real one
- a lease in the wrong name, so the family loses the allowance
- a lease that ended but was never declared as ended
- an E2 form that was not updated with the correct amounts and months
Would you like us to check whether your leases are correctly declared, or to handle the annual declaration of your properties? Contact us. For property tax see also our guide to ENFIA.
If you would like our office to handle it for you, see TAXGROUP services.
Frequently asked questions
Do I have to declare a student lease that lasts only a few months?
Yes. Every residential lease is declared electronically, even if it only runs for the academic year. The declaration is also needed for the family benefits of the student.
What if the student leaves earlier than agreed?
The end of the lease is declared electronically, so that you are not treated as receiving rent for months when there was no tenant.
Do I need an energy performance certificate to rent to a student?
Usually yes. Its number is entered in the lease declaration, so check that it is still valid before you advertise.
Am I taxed on rent that was never paid to me?
You may avoid that, but legal proceedings normally have to have started and the special codes in the tax return have to be completed. Speak to an accountant early.