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Practical manual for Income Tax 2023.

For investment in the rehabilitation of homes intended for rent in rural areas

Regulations: Articles 7.3 and 10 Text Consolidated legal provisions of the Community of Castile and Leon on own and transferred taxes, approved by Legislative Decree 1/2013, of September 12

Amount of deduction

15% of the amounts invested in housing rehabilitation projects.

Requirements for applying the deduction

  • The concept of housing rehabilitation is included in article 20.One.22.B of Law 37/1992, of December 28, on Value Added Tax , or the regulation that replaces it.

    For the purposes of the provisions of article 20.One.22.B of Law 37/1992, of December 28, on Value Added Tax, building rehabilitation works are those that meet the following requirements:

    1. That its main objective is the reconstruction of the same, understanding that this requirement is met when more than 50 percent of the total cost of the rehabilitation project corresponds to works of consolidation or treatment of structural elements, facades or roofs or with works similar or related to rehabilitation.

    2. That the total cost of the works referred to in the project exceeds 25 percent of the purchase price of the building if it had been carried out during the two years immediately prior to the start of the rehabilitation works or, otherwise, of the market value of the building or part thereof at the time of said start. For these purposes, the proportional part corresponding to the land will be deducted from the purchase price or market value of the building.

  • The property must be located in a municipality or a minor local entity of Castilla y León that, at the time of acquisition or rehabilitation, does not exceed:

      • - 10,000 inhabitants, in general, or

      • - 3,000 inhabitants if it is less than 30 kilometres from the provincial capital.

    For these purposes, Order HAC /197/2015, dated March 3 ( BOCyL 03-20-2015) provides that as of January 1 each year, the lists of municipalities that meet the requirements set forth in the regional regulations for the application of tax benefits on the transferred taxes over which the Community of Castilla y León has regulatory powers will be updated. These lists will be published on the Tax Portal of the Junta de Castilla y León (see in this regard https://tributos.jcyl.es) , in section "Tax benefits".

    List of populations excluded from the application of the deduction

    Note: Until December 31, 2015, the term "municipality" was used. From that date, it will be replaced by the term "population" and from February 26, 2021, it will be replaced again by the terms "municipality" or "minor local entity."

  • The value of the property , for the purposes of the tax levied on the acquisition, must be less than 150,000 euros .

Other conditions for the application of the deduction

  1. That during the five years following the completion of the rehabilitation work the home is rented to persons other than the spouse, ascendants, descendants or relatives up to the third degree of kinship (both collateral by consanguinity and by affinity) of the owner of the home.

  2. That, if during the five years provided for in the previous letter, there are periods in which the home is not actually rented, the home is offered for rent in accordance with the requirements established by order of the competent department in matters of finance.

    With effect from July 12, 2019, Order EYH /668/2019, of July 4 ( BOCyL of the 11th), determines when a rehabilitated home in a rural town is offered for rent, and must meet the following requirements:

    1. Taxpayers interested in applying this deduction must have the property actually rented or offered for rent.

    2. Properties offered for rent will be considered those whose lease is announced or advertised through one or more of the following means:

    1. By means of signs on the property itself that is the object of the lease.

    2. Through different advertising media, including specific Internet portals.

    3. Through real estate agencies, including any advertisements they may include on their own real estate portals.

    4. Through real estate agents.

    3. Properties offered for rent may not be actually occupied during the period of time in which they are offered for rent. The consumption of supplies associated with the use of the home, such as electricity, water, gas and/or telephone, must show that the home is not occupied during this period of time.

  3. That the amount of the monthly rent does not exceed 300 euros . The monthly rent amount will be the rent freely stipulated by the parties, and for the concepts agreed upon.

    If the contract does not stipulate otherwise, the general expenses of the home, such as IBI , municipal taxes, community fees, etc ., will be borne by the landlord, in accordance with the civil regulations that govern the matter; If the transfer of these expenses is agreed in the rental contract, they will be borne by the tenant and will form part of the rental amount.

  4. That the legal rental deposit is deposited in accordance with the provisions of the applicable regulations.

Maximum deduction base

The basis for this deduction will be the amounts actually paid by the taxpayer for the rehabilitation work, with a maximum limit of 20,000 euros , both in individual and joint taxation.

Loss of the right to the deduction made

When, in tax periods after the period of application, the right to the deductions made is lost, in whole or in part, the taxpayer will be obliged to add to the autonomous net quota accrued in the year in which the deduction requirements were not met, the amounts unduly deducted, plus the late payment interest referred to in article 26.6 of the LGT .

In relation to the LGT see Law 58/2003, of December 17, General Tax.