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V0518-14 25 February 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · atribución de rentas

Legal defence costs for co-owners are deductible from personal income tax as income from real estate assets

Co-owners of a joint property ownership sued the administrator to account for rental income from a property. The Tax Agency has ruled that, although the joint ownership determines the total income, each co-owner may deduct any legal fees they have paid individually in their own tax return.

The question raised

Issue raised: Deductibility of the aforementioned expenses.

The DGT's ruling

Lease income constitutes income from real estate capital. Legal defense expenses relating to the assets are deductible for the purpose of determining the net income. Since the legal defense expenses for the lawsuit were borne solely by the plaintiff co-owners, each must determine and report them in their own Personal Income Tax return to reduce the attributed net income.

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