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V0712-22 1 April 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · actividad económica

Property leasing is only an economic activity if at least one full-time employee is hired

A query was raised regarding whether property rental constitutes an economic activity and whether such assets would be exempt from Wealth and Inheritance Tax. The DGT ruled that for leasing to be classified as an economic activity, at least one full-time employee must be employed, and that wealth tax exemptions depend on whether said activity is the primary source of income.

The question raised

It is consulted whether the proposed leasing activity would have the nature of an economic activity for the purposes of Personal Income Tax. Furthermore, it is consulted whether the leased properties would be exempt from Wealth Tax and whether the reduction for the transfer of businesses would apply to their hereditary transfer in Inheritance and Gift Tax.

The DGT's ruling

The leasing of real estate only constitutes an economic activity if at least one person is employed under a full-time employment contract. The exemption from Wealth Tax and the reduction in Inheritance Tax require that the activity be habitual, personal, direct, and the taxpayer's main source of income. Assets held in co-ownership are valued separately from private assets to determine their economic nature.

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