7,3,6,3. Deductible expenses

To determine the net income, all expenses necessary to obtain it will be deducted from the total income - only those corresponding to the period of time in which the property has been rented - as well as the amounts destined to the amortization of the rented property with respect to the days in which the rental has lasted and of the other assets transferred with it, provided that they correspond to their effective depreciation.

In particular, the following shall be deemed to be included, among others:

The interest of the foreign capital invested in the acquisition or improvement of the asset, right or faculty of use or enjoyment from which the returns and other financing expenses come, as well as the maintenance and repair expenses.

For these purposes, the following will be considered as repair and maintenance expenses:
- Those carried out regularly for the purpose of maintaining the normal use of material assets, such as painting, plastering or repairing facilities.
- Those for replacing elements, such as heating systems, elevators, security doors or others.
Amounts intended for expansion or improvement will not be deductible under this concept.

The total amount to be deducted for these expenses may not exceed, for each asset or right, the amount of the gross 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 gross income obtained in each of these years, for each asset or right.
Non-state taxes and surcharges , as well as state rates and surcharges, whatever their name, provided that they affect the computed income or the assets or rights that produce them and are not of a punitive nature.
Amounts accrued by third parties as direct or indirect compensation or as a result of personal services , such as administration, surveillance, concierge or similar.
Those caused by the formalization of the lease, sublease, transfer or constitution of rights and those of legal defense related to the assets, rights or income.
The doubtful collection balances provided that this circumstance is sufficiently justified. This requirement will be deemed to have been met:
1. When the debtor is in a situation of bankruptcy.
2. When 3 months have elapsed between the time of the first collection action carried out by the taxpayer and the end of the tax period, and there has been no renewal of credit.
When a doubtful balance is collected after its deduction, it will be computed as income in the year in which said collection occurs.
The amount of the premiums of insurance contracts, whether for civil liability, fire, theft, glass breakage or others of a similar nature, on the assets or rights that produce the income.
Amounts allocated to services or supplies.
The amounts allocated to amortization provided that they correspond to the effective depreciation.

Depreciation will be considered to meet the effectiveness requirement when it does 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 property of a movable nature , likely to be 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 acquisition costs paid 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 total income from each right. Amortization, in this case, will be the result of the following rules:
  - When the right or faculty has a fixed term, the term resulting from dividing the acquisition cost paid for the right by the number of years of duration of the same.
  - When the right or faculty is for life, the result of applying the percentage of 3% to the acquisition cost paid.
Acquisition cost

The acquisition cost paid will be:
- In the case of properties acquired for valuable consideration: the acquisition price including the expenses and taxes inherent to the acquisition (notary, registration, non-deductible VAT , Tax on Property Transfers 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 Gift Tax, which may not exceed the market value, together with the expenses and taxes paid for its acquisition as well as the cost of the investments and improvements made.
Deductible expense corresponding to rentals of premises to certain entrepreneurs in the months of January, February and March 2021

When the landlord has signed a lease agreement for non-residential use with a tenant who uses the property for the development of an economic activity classified in division 6 or in groups 755, 969, 972 and 973 of the first section of the IAE Rates, they may compute as a deductible expense the amount of the reduction in the rental income that they have voluntarily agreed upon as of March 14, 2020 and that corresponds to the monthly payments accrued in the months of January, February and March 2021.

The provisions of the preceding paragraph shall not apply when the landlord is a large holder (understood as, among other cases, the natural person who owns more than 10 urban properties, excluding garages and storage rooms, or a constructed area of more than 1,500 m2).　

This expense cannot be applied when the reduction in rent is subsequently compensated by the tenant through increases in subsequent rents or other benefits or when the tenants are a person or entity linked to the landlord within the meaning of article 18 of the Corporate Income Tax Law or are linked to the landlord by family ties, including the spouse, in a direct or collateral line, by blood or by affinity up to the second degree inclusive.
Compensation for leases prior to May 9, 1985 (DT 3 Law)

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