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V0694-24 15 April 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

Usufructuaries may deduct repair and maintenance costs from rental income

A property owner inquired whether renovation costs for a rented flat should be deducted by her or by her children (the usufructuaries). The Directorate General of Taxes (DGT) ruled that the income belongs to the usufructuaries and that they are entitled to deduct the repair and maintenance expenses incurred.

The question raised

Whether the expenses to carry out the aforementioned renovations, according to the distinction made by the Civil Code in its articles 500 and 501, should be considered necessary or extraordinary, for the purpose of considering them expenses corresponding to the usufructuaries or to the taxpayer, the method of substantiating such expenses, and the deductibility of such expenses in the Personal Income Tax (IRPF) and whether they may be deducted in one or several tax years.

The DGT's ruling

Income from real estate capital is attributed to the usufructuaries as they are the holders of the rights of use and enjoyment. Therefore, the repair and maintenance expenses incurred by them are deductible for the purpose of determining their net income. The deductible amount may not exceed the gross income of the period, and any excess may be offset in the following four years. The classification of whether an expense is ordinary or extraordinary according to the Civil Code is a matter of fact that must be substantiated.

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