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V0328-23 20 February 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción

IVA deduction possible for mixed-use property renovations if classified as investment asset

A self-employed person asks whether IVA can be deducted on renovation works in their home, used partly for economic activity. The DGT responds that deduction is possible if the works are considered investment assets and the partial economic use is applied.

The question raised

Deductibility of Value Added Tax incurred on rehabilitation works in the part intended for economic activity.

The DGT's ruling

To deduct VAT on rehabilitation or renovation works in a property for shared use, these must qualify as investment goods. The deduction shall be carried out to the extent that they represent their degree of use for the development of the business activity. VAT on works that are not investment goods and are used simultaneously for professional activity and private needs is not deductible. Utilities (electricity, internet, etc.) are not deductible as they are not directly and exclusively used for the activity.

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