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V0186-21 4 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Deductibility of expenses necessary to obtain income from real estate capital through leasing

A taxpayer has enquired about the deductibility and substantiation of refurbishment and travel expenses related to a rented property. The DGT has ruled that, if it does not constitute an economic activity, the income is classified as real estate capital income, and the expenses necessary to obtain it may be deducted.

The question raised

Question raised: Deductibility of expenses incurred for Personal Income Tax purposes and the method of substantiating them.

The DGT's ruling

Deductible expenses for determining the net yield of real estate capital are all those necessary for its acquisition. They include interest on third-party capital, repair and maintenance expenses (but not extensions or improvements), taxes, third-party services, formalization expenses, doubtful debts, insurance, utilities, and depreciation. Deductibility must be proportional to the number of days the property is rented during the tax period. The necessity of the expense must be substantiated by means of proof admitted in law.

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