Estimated real estate capital returns and related-party transactions

Estimated returns on real estate capital

Regulations:  Articles 6.5 and 40.1 Law IRPF

The provision of assets or rights that may generate income from real estate capital are presumed to be remunerated, unless proven otherwise.

In the absence of proof to the contrary, the valuation of said returns will be carried out at their normal market value, with normal market value being understood as the consideration that would be agreed between independent subjects, unless there is proof to the contrary.

However, in the case of leases or subleases of real estate or the creation or transfer of rights or powers of use over the same made to relatives, up to the third degree inclusive, the total net income may not be less than the imputed income derived from said property. This special valuation rule is discussed in the section "Minimum computable income in case of kinship" of this same Chapter.

Real estate capital gains and related-party transactions

Regulations: Art. 41 Law Income Tax

In the event that the lease or sublease of real estate or the creation or transfer of rights or powers of use or enjoyment over the same is made to a company with which there are related relations, in the terms provided for in article 18 of Law 27/2014, of November 27, on Corporate Tax ( BOE of the 28th) the taxpayer of IRPF must imperatively carry out its valuation at the normal market value. Normal market value shall be understood as that which would have been agreed upon by independent persons or entities under conditions of free competition.

For this purpose, the taxpayer of IRPF must comply with the documentation obligations of related-party transactions under the terms and conditions established in Chapter V (articles 13 to 16) of the Corporate Tax Regulations, approved by Royal Decree 634/2015, of July 10 ( BOE of the 11th).