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Practical Income Manual 2021.

Deductible expenses

To determine the net return on real estate capital, all the expenses necessary to obtain it, as well as the amounts intended for amortization , can be deducted from the full returns ##1## ##2##of the property and the other assets transferred with it, provided that they respond to its effective depreciation.

In the case of rentals of properties subject to and not exempt from the Value Added Tax (VAT) or the Canary Islands General Indirect Tax (IGIC), the deductible expenses will be computed excluding VAT or, where applicable case, the IGIC .

  1. Interest and other expenses for financing, conservation and repair of the property
  2. Other expenses necessary to obtain returns
  3. Amounts intended for amortization
  4. Compensation for lease contracts prior to May 9, 1985