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Update of rental income by complete annuities with the CPI (ULA)

Updated on 13th June 2024

 

The Consumer Price Index (CPI) methodology was completely renewed in January 2002, and a new calculation system was introduced, which is the one that currently in effect. As a result of this change in the calculation method, rental income by complete annuities has to be updated following any of the procedures proposed hereunder:

A. With the calculation program Do you wish to update a rental income?

The programWould you like to update a personal income or spending? as you only need to enter the initial and final periods for which you need to update your income.

 

B.Calculating the update from the variation rates

The program How much has the CPI varied since....?provides you the increment that should apply to the income you want to update between the periods considered.

 

C. Directly perform calculations using the indices

To perform calculations directly, you should follow the recommendations set forth below, which will vary depending on the periods among which the rental income is to be updated. In this case, it is necessary to take into account that results might differ in some decimals, due to the rounding off as, for practical purposes, INE publishes index-related data rounded-off to three decimal places, but calculates variations using a larger number of decimals.

  • Update of rental income with the CPI between two months subsequent to January 2002

    • formula de cálculo
    • NOTE: The indices quotient should be rounded to 3 decimals before being multiplied by the initial income
    • For example: You wish to update income with the CPI from August 2002 and August 2003.
      • - Income before updating = 400 euros
      • - CPI August 2002 (See table 1): 71.085
      • - CPI August 2003 (See table 1) : 73.213
    • (Three-decimal) indices quotient: 73.213 / 71.085 =1.030
    • Updated income = 400 € x (73.213 / 71.085) = 400 € x 1.030 = 412€

  • Update of rental income with the CPI between a month prior to January 2002 and another subsequent one

    • formula de cálculo
    • NOTE: The indices quotient should be rounded to 3 decimals before being multiplied by the initial income
    • The ULL index (table 3) from each month is obtained by multiplying the general monthly index, in base 2021, (table 1) by the ULL coefficient (table 2) from that same month:
    • For example: You wish to update income with the CPI from January 2001 to January 2002.
      • - Income before updating = 400 euros
      • - CPI from January 2001 (See  Table 4): 133.413
      • - ULL Index from January 2002 (See table 3)= 137.484
    • (Three-decimal) indices quotient: 137.484 / 133.413 = 1.031
    • Updated income = 400 € x (137.484/133.413) = 400 € x 1.031 = 412.40€
    • Note: The indexes in table 1 and the coefficients in table 2 are rounded up to three and six decimals, respectivelly. The ULL index is figured out by using said data with the largest number of decimals.

  • Update of rental income with the CPI between two months prior to January 2002

    • formula de cálculo
    • NOTE: The indices quotient should be rounded to 3 decimals before being multiplied by the initial income
    • For example: You wish to update income with the CPI from August 1999 and August 2001.
      • - Income before updating = 400 euros
      • - CPI August 1999 (See  Table 4): 127.312
      • - CPI August 2001 (See  Table 4): 136.745
    • (Three-decimal) indices quotient:: 136.745 / 127.312 =1.074
    • Updated income = 400 € x (136.745 / 127.312) = 400 € x 1.074 = 429.60€