Leasing of properties intended for housing

Regulations: Art. 23.2 Law Income Tax

Reduction 60%

In the case leasing real estate for residential purposes, the positive net income, calculated by difference between the total gross income and the necessary expenses that are considered deductible, in the terms discussed , will be reduced by 60 , regardless of the age of the tenant.

The landlord of a property that may be used as a dwelling may apply the reduction to the net income derived from said lease when, the tenant being a legal entity, it is proven that the property is intended for the dwelling of certain natural persons.

Criterion established by the Central Economic-Administrative Court, in its Resolution of September 8, 2016, in an extraordinary appeal for the unification of criteria.

These must be income declared by the taxpayer in the corresponding personal income tax return (article 96 of the Personal Income Tax Law) prior to the start of any verification or inspection procedure in whose scope they are included.

Criterion established by the Central Economic-Administrative Court, in its Resolution of March 2, 2017, in an extraordinary appeal for the unification of criteria.

Once the verification procedure has begun, whether it is management or inspection, the data that the taxpayer may provide during the procedure, voluntarily or at the request of the Administration, are no longer within the scope of what is understood by declaration as a mechanism for initiating tax management.

Therefore, the reduction will only apply to the declared income, without the amount of the reduction being increased due to the higher income from real estate capital resulting from the increase in rental income after the verification procedure. Likewise, if a negative return has been recorded, no reduction will apply if, as a result of the verification procedure, a positive return on the real estate capital is found.