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V0442-20 25 February 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Partial residential rentals classified as real estate capital income allow for expense deductions

A taxpayer inquired about the taxation of income derived from renting out their basement to a company and the upper floor to their parents. The Directorate General for Taxes (DGT) ruled that, provided this does not constitute an economic activity, such income is classified as real estate capital income, subject to specific rules regarding deductibility and tax reductions.

The question raised

Taxation in Personal Income Tax (IRPF) of the income received from the leasing of the property to a legal entity and to its parents.

The DGT's ruling

Income from the leasing of parts of a dwelling constitutes returns on real estate capital. Expenses necessary for obtaining such income, as well as the depreciation of the property and furniture, may be deducted proportionally to the leased portion. The 60% reduction applies only if the intended use is a dwelling to satisfy the permanent need of the lessee. In leases to relatives, the net yield may not be lower than the minimum established by law.

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