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V0935-22 29 April 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · rendimientos del capital inmobiliario

60% tax reduction on residential rent applies if contract identifies the specific individual residing in the property

A taxpayer inquired whether the 60% reduction on net income from residential rentals can be applied when the tenant is a legal entity, but the contract specifies the employee who will occupy the property. The Directorate General for Tax (DGT) ruled that this is possible, provided it is proven that the property is intended for the residence of a specific natural person.

The question raised

Whether, in such a case, one would be entitled to the reduction of 60 percent of the positive net yield of real estate capital in the Personal Income Tax.

The DGT's ruling

The reduction provided in Article 23.2 of the Personal Income Tax Law (LIRPF) is applicable when, even if the lessee is a legal entity, it is proven that the property is intended for the residence of specific natural persons. Compliance with this requirement depends on the terms of the lease agreement demonstrating that the exclusive use of the dwelling falls to the natural person identified therein. The assessment of whether these facts are met is the responsibility of the Management and Inspection bodies.

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