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V0255-23 14 February 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · autoconsumo

IVA deductions must be regularised if property's use changes from sale to rental

A company rehabilitated a property for sale and claimed VAT deductions. The question arises on how to regularise these deductions if it ultimately decides to rent out the property.

The question raised

In the event that the housing is used for residential rental, the taxpayer asks how the Value Added Tax installments incurred and deducted during the renovation must be adjusted.

The DGT's ruling

If the foreseeable change of use occurs before the asset enters operation, the adjustment is carried out through the self-consumption of goods (art. 9.1.c or d of Law 37/1992). In this case, when moving from development (full deduction) to residential rental (exempt), self-consumption due to a change in a differentiated sector applies. The taxable base for self-consumption shall be the residual value or the cost of the goods/services that generated the right to deduction.

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