Returns with a generation period of more than two years or obtained in a notoriously irregular manner over time

Regulations: Articles 23.3 Law IRPF and 15 Regulation

Yields to which it applies and percentage of reduction

Once the reduction for leasing of properties intended for residential purposes has been applied, if applicable, % reduction in the resulting net income may be made in the following cases:

1. Net income whose generation period is greater than two years, provided that it is attributed to a single tax period.

2. Net income obtained in a notoriously irregular manner over time, when they are imputed in a single tax period .

   They are considered to be real estate capital returns obtained in a notoriously irregular manner over time. exclusively the following:

   • Amounts obtained from the transfer or assignment of the lease agreement for business premises.

     In the case of transfer or assignment of the lease contract for business premises, it must be specified that the amount received by the owner of the property, that is, the owner or the holder of a right of enjoyment over it, is considered to be income from real estate capital obtained in a notoriously irregular manner over time.

     However, the amount received by the tenant for the transfer or assignment of the lease contract, not being the owner of any real rights over the property, does not constitute income from real estate capital, but rather capital gain. See the example contained in Chapter 11 on determining capital gains in the cases of transfer or assignment of the lease contract for business premises .

   • Compensation received from the tenant, subtenant or assignee for damage or defects in the property.

   • Amounts obtained from the constitution or transfer of rights of use or enjoyment of a lifelong nature.

Maximum amount of performance to which the reduction applies

Once the reduction for housing rental has been applied, if applicable, the amount of the resulting net income on which the 30% reduction will be applied may not exceed the amount of 300,000 euros per year .

Please note that in the event of positive and negative irregular returns, the maximum base of the reduction will be their algebraic sum.

In the event that several irregular returns of the same nature are obtained, and their amount exceeds the limit of 300,000 euros of maximum amount on which to apply the 30% reduction, the maximum reduction will be distributed proportionally among all the returns of that nature.

Income received in installments before January 1, 2015 Transitional regime

Regulations:  Twenty-fifth transitional provision. 3 Law Income Tax

Any income received in installments prior to 1 January 2015 that is entitled to apply the reduction for income with a generation period of more than two years or obtained in a notoriously irregular manner over time provided for in article 23.3 of the Income Tax Law, as worded of 31 December 2014, may apply the current reduction of 30% up to a maximum reduction base of 300,000 euros, to each of the installments imputed as of 1 January 2015, provided that the quotient resulting from dividing the number of years of generation, computed from date to date, by the number of tax periods of installment payment is greater than two.

However, in the case of income derived from commitments acquired prior to 1 January 2015, which were scheduled to begin being collected in installments in tax periods beginning on or after that date, the substitution of the initially agreed method of collection for collection in a single tax period will not alter the start of the period for generating the income.