7,3,6,3. Deductible expenses

To determine the net income, all the expenses necessary to obtain it, as well as the amounts destined for the amortization of the property and the other assets transferred with it, will be deducted from the full income, provided that they correspond to its effective depreciation.

In particular, the following will be considered included, among others:

1. The interest on foreign capital invested in the acquisition or improvement of the property, right or power of use or enjoyment from which the income and other financing expenses arise, as well as conservation and repair expenses.

   For these purposes, the following will be considered repair and conservation expenses:

   • Those carried out regularly with the purpose of maintaining the normal use of material assets, such as painting, plastering or repairing facilities.

   • Those for replacing elements, such as heating installations, elevators, security doors or others.

   Amounts intended for expansion or improvement will not be deductible for this concept.

   The total amount to be deducted for these expenses may not exceed, for each asset or right, the amount of the full income obtained.

   The excess may be deducted in the following four years, without exceeding, together with the expenses for these same concepts corresponding to each of these years, the amount of the full returns obtained in each of them, for each asset. or right.

2. Non-state taxes and surcharges, as well as state fees and surcharges, whatever their name, provided that they affect the computed income or the goods or rights that produce them and do not have a sanctioning nature.

3. Amounts accrued by third parties in direct or indirect consideration or as a consequence of personal services, such as administration, security, porterage or similar.

4. Those caused by the formalization of the lease, sublease, assignment or constitution of rights and those of legal defense related to the assets, rights or income.

5. Doubtful balances provided that this circumstance is sufficiently justified. This requirement will be understood to have been met:

   1. When the debtor is in bankruptcy.

   2. When 3 months have passed between the time of the first collection process carried out by the taxpayer and the end of the tax period, and a credit renewal has not occurred.

   When a doubtful balance is collected after its deduction, it will be computed as income in the year in which said collection occurs.

6. The amount of premiums for insurance contracts, whether for civil liability, fire, theft, glass breakage or others of a similar nature, on the assets or rights producing the income.

7. The amounts intended for services or supplies.

8. The amounts destined for amortization as long as they correspond to the effective depreciation.

Amounts intended for amortization

Amortizations will be considered to meet the effectiveness requirement when they do not exceed the percentages indicated below:

• In the case of real estate, if it does not exceed the result of applying 3% to the highest of the following values: the acquisition cost paid or the cadastral value, without including the value of the land in the calculation.

  When the value of the land is not known, it will be calculated by prorating the acquisition cost paid between the cadastral values of the land and the construction for each year.

• Regarding assets of a movable nature, capable of being used for a period of more than one year and transferred together with the property: when, in each year, they do not exceed the result of applying to the satisfied acquisition costs the amortization coefficients determined in accordance with the amortization table approved for the simplified direct estimation regime.

• Real rights of use and enjoyment . In the event that the income comes from the ownership of real rights of use or enjoyment, the acquisition cost paid may be amortized, up to the limit of the full income of each right. Amortization, in this case, will be the result of the following rules:

  • When the right or power has a specific duration, the amount resulting from dividing the acquired acquisition cost of the right by the number of years of its duration.

  • When the right or power was for life, the result of applying the percentage of 3% to the acquired acquisition cost.

Acquisition cost

The acquisition cost satisfied will be:

• In the case of properties acquired for consideration : the acquisition price including the expenses and taxes inherent to the acquisition (notary, registration, non-deductible VAT, Property Transfer Tax and Documented Legal Acts, agency expenses, etc.) as well as the cost of the investments and improvements made.

• In the case of properties acquired free of charge (inheritance or donation): the value of the asset determined according to the rules of the Inheritance and Donation Tax, without exceeding the market value, together with the expenses and taxes paid for its acquisition as well as the cost of the investments and improvements made.

Compensation for lease contracts prior to May 9, 1985 (DT 3 Law)

In the case of lease contracts entered into prior to May 9, 1985, which do not enjoy the right to review the rent by application of rule 7 of section 11 of the second transitional provision of Law 29/1994, of November 24, of Urban Leases, an amount equivalent to the depreciation of the property will be additionally included as a deductible expense, while this situation persists and as compensation.