Concept and requirements of the imputation of real estate income

Subject

The following are considered imputed real estate income income that the taxpayer must include in his tax base for being owner or holder of a real right of enjoyment over real estate that meets the requirements listed below.

It also generates imputed real estate income from the ownership of a real right of time-share use over urban real estate, in the terms that are also discussed below.

In both cases, the properties must be that do not generate capital gains or are not affected by economic activities .

Note: The granting of the right to use parking spaces for residents does not generate the imputation of real estate income, since said concession does not constitute a real right.

Requirements for the imputation of real estate income

The imputation of real estate income is conditional on the properties from which said presumed income is derived meeting the following requirements:

• That it concerns urban real estate qualified as such in article 7 of the consolidated text of the Real Estate Cadastre Law, approved by Royal Legislative Decree 1/2004, of March 5 ( BOE of March 8), not affected by economic activities.

• That it is rustic properties with buildings that are not essential for the development of agricultural, livestock or forestry operations, not affected by economic activities.

  The concept of assets affected economic activities is discussed in Chapter .

• That do not generate capital returns . Capital gains may be derived from the leasing of real estate, businesses or mines or from the creation or transfer of rights or powers of use or enjoyment over real estate.

  Returns on capital are discussed in Chapter 4 (Returns on real estate capital) and Chapter 5 (Returns on movable capital) of this manual.

  Please note that real estate that is not leased or subleased, but is intended to be so (properties in expectation of rental), generates imputation of real estate income. Supreme Court judgment of February 25, 2021, issued in cassation appeal no. 1302/2020 (ROJ: STS 910/2021).

  Unlike the above, when the property is exclusively used for the development of the economic activity of leasing, there will be no obligation to impute real estate income, even if for part of the tax period the property is not leased, but is expected to be rented.

• That they do not constitute the habitual residence of the taxpayer . For these purposes, parking spaces acquired together with the property, up to a maximum of two, are considered to be part of the taxpayer's habitual residence.

  The imputation of real estate income provided for in article 85 of the Personal Tax Law also not applicable for the family home (owned by both spouses 50/50), when in the event of separation, annulment or divorce, its use, in accordance with article 96 of the Civil Code, is attributed by the judicial authority to the former spouse and, where appropriate, to the children in whose company they remain, even if this does not constitute the habitual residence of the other parent.

• That it is not undeveloped land, properties under construction or properties that, for urban planning reasons, are not susceptible to use .

  In the case of an empty property illegally occupied by third parties against the owner's will, and once an eviction procedure has been initiated by the owner of the property and provided that this is duly accredited, it is considered that the imputation of real estate income is not appropriate from the moment in which said procedure was initiated, without the need to wait for its resolution.

Remember: the income imputation regime does not take into account the effective use of second home but rather its availability in favor of its owner, limiting the Income Tax Law the cases in which the imputation of real estate income not applicable only to the : that the property is used for an economic activity, that the property generates capital income, that it is under construction and that it is not susceptible to use for urban planning reasons.